Forex Market: GBP/USD daily trading outlook

Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.3073-1.3237. The pair closed at 1.3223, rising 0.71% compared to Tuesdays close. It has been the 140th gain in the past 303 trading days and also the steepest one since July 20th, when the pair rose 0.74%. The daily high has been the highest level since July 22nd, when a high of 1.3290 was registered. The major pair has trimmed its slump to 0.68% so far during the current month, after depreciating 8.06% in June.

At 7:02 GMT today GBP/USD was edging down 0.20% on the day to trade at 1.3197. The pair touched a daily high at 1.3251 during the early phase of the Asian trading session, undershooting the daily R2 level, and a daily low at 1.3166 during late Asian trade.

On Thursday GBP/USD trading may be influenced by the following macroeconomic report listed below.

Fundamentals

United States

Initial, Continuing Jobless Claims

The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on July 22nd, probably rose to 260 000, according to market consensus, from 253 000 in the preceding week. The latter has been the lowest number of claims since the business week ended on April 15th, when a revised up 248 000 claims were reported.

The 4-week moving average, an indicator lacking seasonal effects, was 257 750, marking a drop by 1 250 compared to the preceding weeks unrevised average.

The business week, which ended on July 15th, has been the 72nd consecutive week, when jobless claims stood below the 300 000 threshold, which suggested a healthy labor market. It has been the longest streak in 43 years.

Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or increased further, this would have a moderate bearish effect on the US dollar.

The number of continuing jobless claims probably rose to the seasonally adjusted 2 130 000 during the business week ended on July 15th, according to the median forecast by experts, from 2 128 000 in the preceding week. The latter represented a drop by 25 000 compared to the revised up number of claims reported in the week ended on July 1st. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.

The US Department of Labor is to release the weekly report at 12:30 GMT.

Bond Yield Spread

The yield on UK 2-year government bonds went as high as 0.176% on July 27th, after which it closed at 0.133% to lose 3.8 basis points (0.038 percentage point) compared to July 26th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.778% on July 27th, or matching the high from a day ago, while also being the highest level since June 23rd (0.787%), after which it fell to 0.722% at the close to lose 3.6 basis points (0.036 percentage point) compared to July 26th.

The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, widened to 0.589% on July 27th from 0.587% on July 26th. The July 27th yield spread has been the highest one since July 25th, when the difference was 0.598%.

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 – 1.3238
R2 – 1.3253
R3 (Range Resistance – Sell) – 1.3268
R4 (Long Breakout) – 1.3313
R5 (Breakout Target 1) – 1.3366
R6 (Breakout Target 2) – 1.3389

S1 – 1.3208
S2 – 1.3193
S3 (Range Support – Buy) – 1.3178
S4 (Short Breakout) – 1.3133
S5 (Breakout Target 1) – 1.3080
S6 (Breakout Target 2) – 1.3057

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