Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.2935-1.3030. The pair closed at 1.2956, losing 0.42% compared to Wednesdays close. It has been the 171st drop in the past 314 trading days. The daily low has been the lowest level since July 11th, when a low of 1.2851 was registered. The major pair has increased its decline to 2.10% so far during the current month, after losing 0.59% of its value in July.
At 7:09 GMT today GBP/USD was inching down 0.01% on the day to trade at 1.2955. The pair touched a daily high at 1.2980 during the late phase of the Asian trading session, undershooting the range resistance level (R3), and a daily low at 1.2945 during early European trade.
On Friday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United States
Producer Prices
Annual producer prices in the United States probably rose for a second consecutive month in July, edging up 0.2%, according to the median estimate by experts. In June prices went up at an annual rate of 0.3%, while marking the first increase since December 2014. The Producer Price Index reflects the change in prices of over 8 000 products, sold by manufacturers during the respective period. The PPI differs from the Consumer Price Index (CPI), which measures the change in prices from consumer’s perspective, due to subsidies, taxes and distribution costs of different types of manufacturers in the country. In case producers are forced to pay more for goods and services, they are more likely to pass these higher costs to the end consumer. Therefore, the PPI is considered as a leading indicator of consumer inflation. In case annual producer prices rose at a faster rate than anticipated in July, this would have a limited-to-moderate bullish effect on the US dollar.
The nation’s annualized core producer price inflation, which excludes prices of volatile categories such as food and energy, probably decelerated to 1.2% in July from 1.3% in June. The latter has been the fastest annual increase in the core PPI since January 2015, when the index gained 1.6%. The Bureau of Labor Statistics is expected to report on the official PPI performance at 12:30 GMT.
Retail Sales
Retail sales in the United States probably rose for a fourth straight month in July, going up at a monthly rate of 0.4%, according to the median forecast by experts, following a 0.6% surge in June.
Among the 13 major categories, 11 registered growth, 1 registered a decline and 1 showed no change in June. During the period, higher sales were observed at motor vehicle and part dealers (+0.1%), furniture and home furniture stores (+0.5%), building material and garden equipment and supplies dealers (+3.9%), gasoline stations (+1.2%), non-store retailers (+1.1%), miscellaneous store retailers (+0.9%), sporting goods, hobby, book and music stores (+0.8%), health and personal care stores (+0.7%) and food and beverage stores (+0.5%).
On the other hand, in June, sales were lower at clothing and clothing accessories stores (-1.0%), while sales at electronics and appliance stores remained flat, according to the report by the US Census Bureau.
Annualized retail sales increased 2.7% in June, following a 2.5% climb in May.
US core retail sales, or retail sales ex autos, probably rose 0.2% in July compared to a month ago, according to expectations, following another 0.7% gain in June. If so, it would be a fifth consecutive month of increase. This indicator removes large ticket prices and historical seasonality of automobile sales.
In case the general index of sales rose at a slower rate than anticipated in July, this would have a strong bearish effect on the US dollar. The official report by the US Census Bureau is due out at 12:30 GMT.
Reuters/Michigan Consumer Sentiment Index – preliminary reading
The monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States improved in August. The preliminary reading of the corresponding index, which usually comes out two weeks ahead of the final data, probably rose to a reading of 91.5 during the current month from a final 90.0 in July. The latter came above the preliminary reading of 89.5, which was reported on July 15th.
The sub-index of current economic conditions increased to a final reading of 109.0 in July from a preliminary value of 108.7. In June this barometer was reported at a final 110.8.
The sub-index of consumer expectations came in at a reading of 77.8, up from a preliminary value of 77.1 in July, but down from a final reading of 82.4 registered in June.
Participants in the July survey expected that the rate of inflation will be at 2.7% during the next year, or down from a rate of 2.8% in the preliminary release, but up from a rate of 2.4% in the June survey.
In case the gauge of consumer sentiment met or even exceeded expectations in August, this would have a moderate-to-strong bullish effect on the US Dollar. The preliminary reading is due out at 14:00 GMT.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.160% on August 11th, or the highest level since August 4th (0.211%), after which it closed at 0.116% to add 1.6 basis points (0.016 percentage point) compared to August 10th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.754% on August 11th, or the highest level since July 27th (0.778%), after which it fell to 0.753% at the close to add 6.3 basis points (0.063 percentage point) compared to August 10th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, widened to 0.637% on August 11th from 0.590% on August 10th. The August 11th 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 – 1.2965
R2 – 1.2973
R3 (Range Resistance – Sell) – 1.2982
R4 (Long Breakout) – 1.3008
R5 (Breakout Target 1) – 1.3039
R6 (Breakout Target 2) – 1.3051
S1 – 1.2947
S2 – 1.2939
S3 (Range Support – Buy) – 1.2930
S4 (Short Breakout) – 1.2904
S5 (Breakout Target 1) – 1.2873
S6 (Breakout Target 2) – 1.2861
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.3155
R1 – 1.3289
R2 – 1.3507
R3 – 1.3641
R4 – 1.3774
S1 – 1.2937
S2 – 1.2803
S3 – 1.2585
S4 – 1.2366
In monthly terms, for GBP/USD we have the following pivots:
Central Pivot Point – 1.3171
R1 – 1.3546
R2 – 1.3858
R3 – 1.4233
R4 – 1.4608
S1 – 1.2859
S2 – 1.2484
S3 – 1.2172
S4 – 1.1860
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