Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.3092-1.3165. The pair closed at 1.3140, edging up 0.23% compared to Fridays close. It has been the 139th gain in the past 301 trading days. The major pair has extended its slump to 1.50% so far during the current month, after depreciating 8.06% in June.
At 6:45 GMT today GBP/USD was shedding 0.39% on the day to trade at 1.3089. The pair touched a daily high at 1.3125 during the late phase of the Asian trading session, undershooting the daily R1 level, and a daily low at 1.3081 during early European trade.
On Tuesday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United Kingdom
BBA Home Loans
The number of home loans in the United Kingdom, issued by the British Bankers’ Association (BBA), probably decreased to 40 200 in June, according to market expectations, from the unrevised 42 200 in May. The BBA features the major banks in the country, which account for almost 60% of overall mortgage lending. The number of mortgage loans is considered as a leading indicator in regard to UK housing market conditions. As growth in mortgage lending signifies a healthy housing sector, which also contributes to overall economic activity, in case the number of loans dropped more than projected, this would have a moderate bearish effect on the Sterling. The BBA is to publish the official figure at 8:30 GMT.
United States
S&P/Case-Schiller Home Price Index
At 13:00 GMT Standard & Poors/Case-Schiller will report on the performance of their House Price Index, which measures the change in values of single-family homes in 20 metropolitan areas across the United States. The report serves as a gauge of the US housing markets health. According to the median estimate by experts, home prices in the 20 areas probably rose 5.6% in May compared to May 2015, following a 5.4% surge in April. If expectations were met, Mays rate of increase would be the sharpest one since January, when home values climbed 5.7% year-on-year. Within a recovering economy, a sharper-than-projected gain in prices will usually have a limited-to-moderate bullish effect on the local currency.
Services PMI by Markit – preliminary reading
Activity in the US sector of services probably increased at a faster rate in July from a month ago, with the corresponding preliminary Purchasing Managers Index coming in at a reading of 52.0, according to the median forecast by experts, from a final 51.4 in June. If expectations were met, this would be the highest PMI level since April, when the gauge came in at 52.8. According to Markit, in June the gauge of new work rose at the fastest rate since the start of the year, while business expectations for next year hit a record low.
The PMI is based on data collected from a representative panel of more than 400 private sector companies, which encompasses industries such as transport and communication, financial intermediaries, business and personal services, computing & IT and hotels & restaurants. Values above the key level of 50.0 indicate predominant optimism (expansion in general activity). In case a faster than-expected expansion in services sector activity is reported, this would have a moderate bullish effect on the US dollar, as services contribute to a considerable portion of the US GDP. The preliminary reading by Markit Economics is due out at 13:45 GMT.
Consumer Confidence Index by the CB
Confidence among consumers in the United States probably lowered in July, with the corresponding index coming in at a reading of 95.8, according to market expectations. In June the gauge was reported at 98.0, or the highest level since October 2015, when a revised up index value of 99.1 was reported.
This indicator measures the level of individuals confidence in the US economic development. It is considered as a leading indicator, as it gives an early insight into consumer spending, which accounts for a major part of the nations GDP.
In case the index fell more than anticipated, this would have a strong bearish effect on the US dollar, as lower confidence suggests a lesser willingness to spend and, respectively, a slower economic growth. The Conference Board research group is to publish the official index reading at 14:00 GMT.
New Home Sales
Sales of new single-family homes probably rose at a monthly rate of 1.6% to the seasonally adjusted annual rate of 560 000 in June, according to market expectations, from 551 000 reported in the preceding month. In May, sales in the Northeast plummeted 33.3% to 34 000, those in the West were 15.6% lower to 124 000, while sales in the South fell 0.9% to 323 000. On the other hand, new home sales in the Midwest rose 12.9% to 70 000 in May.
The median sales price of new houses sold went down as low as USD 290 400 in May, after being at USD 320 200 in the preceding month. The average sales price dropped to USD 358 900 in May from USD 378 200 in April. At the end of the month, the seasonally adjusted estimate of new houses for sale reached 244 000, or a level unseen since September 2009. It represents a supply of 5.3 months at the current sales rate, according to the report by the US Census Bureau.
In case the index showed a better-than-anticipated performance, this would support demand for the US Dollar. The Census Bureau is to report the official figure at 14:00 GMT.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.174% on July 25th, after which it closed at 0.156% to add 2.1 basis points (0.021 percentage point) compared to July 22nd.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.762% on July 25th, or the highest level since June 23rd (0.787%), after which it fell to 0.760% at the close to add 4.5 basis points (0.045 percentage point) compared to July 22nd.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, widened to 0.604% on July 25th from 0.572% on July 22nd. The July 25th yield spread has been the highest one so far this year.
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 – 1.3147
R2 – 1.3153
R3 (Range Resistance – Sell) – 1.3160
R4 (Long Breakout) – 1.3180
R5 (Breakout Target 1) – 1.3204
R6 (Breakout Target 2) – 1.3213
S1 – 1.3133
S2 – 1.3127
S3 (Range Support – Buy) – 1.3120
S4 (Short Breakout) – 1.3100
S5 (Breakout Target 1) – 1.3076
S6 (Breakout Target 2) – 1.3067
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.3163
R1 – 1.3264
R2 – 1.3418
R3 – 1.3519
R4 – 1.3621
S1 – 1.3009
S2 – 1.2908
S3 – 1.2754
S4 – 1.2601
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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