Yesterday’s trade saw GBP/USD within the range of 1.2877-1.3047. The pair closed at 1.2906, shedding 0.19% compared to Wednesdays close. It has been the 158th drop in the past 289 trading days and also a third consecutive one. The major pair has extended its slide to 2.76% so far during the current month, after depreciating 7.94% in June.
At 6:31 GMT today GBP/USD was edging up 0.33% on the day to trade at 1.2948. The pair touched a daily high at 1.2971 during the late phase of the Asian trading session, overshooting the range resistance level (R3), and a daily low at 1.2881 during early Asian trade.
On Friday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United Kingdom
Balance of Trade
The deficit on United Kingdom’s visible trade balance (goods only) probably widened to GBP 10.65 billion in May, according to market expectations, from GBP 10.53 billion in April. The latter has been the smallest gap on the countrys trade in goods since December 2015, when a revised up deficit of GBP 10.45 billion was reported.
The deficit on United Kingdoms total trade balance shrank to GBP 3.29 billion in April from a revised down gap of GBP 3.53 billion in March. Aprils figure represented the lowest shortfall since September 2015.
During the month, total exports expanded 5.3% to reach GBP 44.94 billion, or their highest level since August 2013. April performance was mainly supported by a GBP 2.2 billion increase in shipments of goods, while services exports rose modestly, by GBP 0.1 billion. Shipments of chemicals rose GBP 0.5 billion in April, those of machinery were up GBP 0.4 billion, oil sales went up GBP 0.3 billion and shipments of cars and unspecified goods increased GBP 0.2 billion.
Total imports expanded 4.4% to reach GBP 48.24 billion during the same period, rebounding from two straight months of decline. April performance was mostly supported by a GBP 2.0 billion surge in purchases of goods and attributed to a GBP 0.7 billion rise in chemicals imports, a GBP 0.4 billion increase in machinery imports and a GBP 0.2 billion gain in purchases of ships.
In case the UK visible trade deficit widened more than anticipated in April, this would have a moderate bearish effect on the Sterling, because of negative implications regarding the nations economic growth. The Office for National Statistics (ONS) will release the official trade data at 8:30 GMT.
United States
Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings
Employers in all sectors of economy in the United States, excluding the farming industry, probably added 175 000 new jobs in June, according to the median forecast by experts, after a job gain of 38 000 in May. The latter has been the slowest growth rate since May 2011, when a revised down figure of 25 000 was reported.
Employment in health care rose by 46 000 in May and by 10 000 in professional and business services. On the other hand, employment continued to decrease in the US mining sector (-10 000), fell by 18 000 in manufacturing and by 34 000 in information services. Employment in other key industries such as construction, wholesale trade, retail trade, transportation and warehousing, financial activities, leisure and hospitality, government remained little changed in May.
Total non-farm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a lower-than-expected gain in jobs in June, demand for the US dollar would be strongly pressured.
Average Hourly Earnings probably increased 0.2% in June compared to the prior month, according to market expectations, following another 0.2% gain to USD 25.59 in May. If expectations were met, June would be the fourth consecutive month of earnings increase.
Meanwhile, the rate of unemployment in the country probably increased to 4.8% in June, according to market expectations, from 4.7% in May. The latter has been the lowest rate of unemployment since November 2007.
The total number of people unemployed dropped by 484 000 at 7.4 million in May. Among major groups, the unemployment rate for adult men (4.3%), adult women (4.2%), Whites (4.1%), and Hispanics (5.6%) fell during the month. On the other hand, the rates for teenagers (16.0%), Blacks (8.2%) and Asians (4.1%) remained little changed.
The number of long-term unemployed (those looking for employment for 27 weeks or more) dropped by 178 000 to 1.9 million during May and comprised 25.1% of the unemployed, according to the BLS. At the same time, the number of persons in part-time employment for economic reasons (involuntary part-time workers) went up by 468 000 to 6.4 million in May.
In case the unemployment rate met expectations or even rose further, this would have a strong bearish effect on the US Dollar, because of the negative implications for consumer spending. The Bureau of Labor Statistics will release the official employment report at 12:30 GMT.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.178% on July 7th, after which it closed at 0.138% to lose 0.007 percentage point compared to July 6th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.617% on July 7th, or the highest level since June 30th (0.649%), after which it fell to 0.597% at the close to add 1.6 basis points (0.016 percentage point) compared to July 6th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, widened to 0.459% on July 7th from 0.436% on July 6th. The July 7th yield spread has been the highest one since June 30th, when the difference was 0.476%.
Daily, Weekly and Monthly Pivot Levels
By employing the Camarilla calculation method, the daily levels of importance for GBP/USD are presented as follows:
R1 – 1.2922
R2 – 1.2937
R3 (Range Resistance – Sell) – 1.2953
R4 (Long Breakout) – 1.3000
R5 (Breakout Target 1) – 1.3054
R6 (Breakout Target 2) – 1.3076
S1 – 1.2890
S2 – 1.2875
S3 (Range Support – Buy) – 1.2859
S4 (Short Breakout) – 1.2813
S5 (Breakout Target 1) – 1.2758
S6 (Breakout Target 2) – 1.2736
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.3315
R1 – 1.3511
R2 – 1.3761
R3 – 1.3957
R4 – 1.4154
S1 – 1.3065
S2 – 1.2869
S3 – 1.2619
S4 – 1.2370
In monthly terms, for GBP/USD we have the following pivots:
Central Pivot Point – 1.3817
R1 – 1.4517
R2 – 1.5722
R3 – 1.6422
R4 – 1.7121
S1 – 1.2612
S2 – 1.1912
S3 – 1.0707
S4 – 0.9501
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