Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.3297-1.3447. The pair closed at 1.3439, soaring 1.03% compared to Mondays close. It has been the 153rd gain in the past 332 trading days, a fourth consecutive one and also the steepest one since August 16th. The daily high has been a level unseen since July 15th, when a high of 1.3483 was registered. The major pair has increased its advance to 2.28% so far during the current month, after losing 0.72% in August.
At 7:19 GMT today GBP/USD was edging down 0.28% on the day to trade at 1.3402. The pair touched a daily high at 1.3443 during the early phase of the Asian trading session, undershooting the daily R1 level, and a daily low at 1.3398 during early European trade.
On Wednesday GBP/USD trading may be influenced by the following macroeconomic reports and other events as listed below.
Fundamentals
United Kingdom
Industrial, Manufacturing Production
Annualized industrial production in the United Kingdom probably expanded for a fourth consecutive month in July, according to market expectations, at a pace of 1.9%. In June the index of industrial output rose 1.6% year-on-year. In monthly terms, industrial production probably shrank 0.2% in July, according to expectations, following a 0.1% expansion in June. Within the index, the gauge of mining and quarrying surged 1.2% in June, the index of electricity, gas, steam and air conditioning rose 0.9%, while the one of water supply, sewerage and waste management went up 0.5%. On the other hand, the gauge of manufacturing shrank 0.3% in June. The index of industrial output measures the change in the total inflation-adjusted value of production in sectors such as manufacturing, mining and utilities. Consistent rates of increase in industrial production suggest inflation pressure build-up.
United Kingdom’s annualized manufacturing production, an indicator which accounts for almost 80% of the nation’s industrial output, probably grew 1.7% in July, according to the median forecast by analysts. If so, this would be the fourth consecutive period of expansion. In June manufacturing output rose at an annualized rate of 0.9%. In monthly terms, manufacturing production probably contracted for a third straight month in July, going down 0.4%, according to the median estimate by experts. As it is a key component of the country’s Gross Domestic Product, in case annual manufacturing production rose more than projected, this would have a moderate bullish effect on the Sterling. The Office for National Statistics (ONS) will release the official industrial report at 8:30 GMT.
BoE Carney statement
At 13:15 GMT Bank of England Governor, Mark Carney, is expected to take a statement in front of the Parliaments Treasury Committee. Any remarks in regard to monetary policy stance or UK economic outlook would certainly boost GBP volatility.
GDP estimate by the NIESR
At 14:00 GMT the National Institute of Economic and Social Research (NIESR) will release its estimate in regard to UK Gross Domestic Product over the three months to August. During the three-month period to July the NIESR estimate pointed to a 0.3% GDP growth, or the lowest projection since the three-month period to April 2016 (+0.3%). The report is considered as highly reliable and usually heightens volatility of the pairs containing the Sterling.
United States
Job Openings
The number of job openings in the United States probably dropped to 5.580 million in July, according to the median forecast by experts, from 5.624 million during the preceding month. In June, the number of positions waiting to be filled rose mostly in durable goods manufacturing (+37 000), while decreasing in federal government (-15 000).
This indicator refers to all job positions that are open, but not filled on the last business day of the month. Job openings are part of the Job Openings and Labor Turnover Survey (JOLTS), which gathers data from about 16 400 non-farm establishments including retailers and manufacturers, as well as federal, state, and local government entities in the 50 states and the District of Columbia. The survey assesses the unmet demand for labor in the labor market. A lower-than-projected level of job openings will usually have a limited bearish effect on the US Dollar. The Bureau of Labor Statistics is to release the official report at 14:00 GMT.
Beige Book
At 18:00 GMT the Federal Reserve is to release its ”Beige Book” report. It is published eight times during the year. Each of the banks in the 12 Federal Reserve Districts gathers data in regard to current economic situation in the country on the basis of interviews with key business contacts, economists, market experts, and other sources. In case the Beige Book presents an optimistic economic outlook, this will usually support the US Dollar, while a pessimistic view will have a bearish effect on the currency.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.166% on September 6th, after which it closed at 0.098% to lose 3.9 basis points (0.039 percentage point) compared to September 5th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.806% on September 6th, after which it fell to 0.734% at the close to lose 6.8 basis points (0.068 percentage point) compared to September 5th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, narrowed to 0.636% on September 6th from 0.665% on September 5th. The September 6th yield spread has been the lowest one since August 25th, when the difference was 0.634%.
Daily, Weekly and Monthly Pivot Levels
By employing the Camarilla calculation method, the Monday levels of importance for GBP/USD are presented as follows:
R1 – 1.3453
R2 – 1.3467
R3 (Range Resistance – Sell) – 1.3480
R4 (Long Breakout) – 1.3522
R5 (Breakout Target 1) – 1.3570
R6 (Breakout Target 2) – 1.3591
S1 – 1.3425
S2 – 1.3412
S3 (Range Support – Buy) – 1.3398
S4 (Short Breakout) – 1.3357
S5 (Breakout Target 1) – 1.3308
S6 (Breakout Target 2) – 1.3287
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.3236
R1 – 1.3412
R2 – 1.3531
R3 – 1.3707
R4 – 1.3883
S1 – 1.3117
S2 – 1.2941
S3 – 1.2822
S4 – 1.2703
In monthly terms, for GBP/USD we have the following pivots:
Central Pivot Point – 1.3126
R1 – 1.3387
R2 – 1.3634
R3 – 1.3895
R4 – 1.4155
S1 – 1.2879
S2 – 1.2618
S3 – 1.2371
S4 – 1.2123
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