Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.2947-1.3067. The pair closed at 1.2988, edging down 0.32% compared to Mondays close. It has been the 185th drop in the past 342 trading days. The daily low has been a level unseen since August 16th, when a low of 1.2878 was registered. The major pair has increased its drop to 1.15% so far during the current month, after losing 0.72% in August.
At 7:16 GMT today GBP/USD was ticking down 0.01% on the day to trade at 1.2987. The pair touched a daily high at 1.3006 during the early phase of the Asian trading session, undershooting the daily R2 level, and a daily low at 1.2945 during late Asian trade.
On Wednesday GBP/USD trading may be influenced by the following reports and other events as listed below.
Fundamentals
United Kingdom
BoE Quarterly Bulletin
At 11:00 GMT Bank of England is expected to release its Quarterly Bulletin, which contains regular commentary on market conditions and monetary policy operations.
United States
FOMC policy decision
The Federal Open Market Committee (FOMC) will probably keep the target range for the federal funds rate intact between 0.25% and 0.50% at its two-day policy meeting, scheduled to be concluded today, according to the median forecast by experts.
In July the target range was left intact for the fifth time. Policy makers noted that the labor market conditions improved, while near-term growth risks diminished, thus, suggesting a hike this year was still a possibility.
According to the FOMC’s Policy Statement released in July: ”Information received since the Federal Open Market Committee met in June indicates that the labor market strengthened and that economic activity has been expanding at a moderate rate. Job gains were strong in June following weak growth in May. On balance, payrolls and other labor market indicators point to some increase in labor utilization in recent months. Household spending has been growing strongly but business fixed investment has been soft. Inflation has continued to run below the Committees 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports.”
The Minutes from the FOMC’s meeting on July 26th-27th revealed that officials decided to leave policy options open, while maintaining the flexibility of adjusting interest rates in accordance with incoming macroeconomic data.
”Members generally agreed that, before taking another step in removing monetary accommodation, it was prudent to accumulate more data in order to gauge the underlying momentum in the labor market and economic activity. A couple of members preferred also to wait for more evidence that inflation would rise to 2 percent on a sustained basis. Some other members anticipated that economic conditions would soon warrant taking another step in removing policy accommodation. One member preferred to raise the target range for the federal funds rate at the current meeting, citing the easing of financial conditions since the U.K. referendum, the return to trend economic growth, solid job growth, and inflation moving toward 2 percent”, the Minutes stated.
”… members emphasized that the actual path of the federal funds rate would depend on the economic outlook as informed by incoming data. In that regard, members judged it appropriate to continue to leave their policy options open and maintain the flexibility to adjust the stance of policy based on incoming information and its implications for the Committees assessment of the outlook for economic activity, the labor market, and inflation, as well as the risks to the outlook.”
The FOMC will announce its official decision on policy at 18:00 GMT, which will be followed by a press conference with Fed Chair, Janet Yellen, at 18:30 GMT. Yellen’s remarks will be closely examined for hints regarding the Bank’s future policy stance.
Bond Yield Spread
The yield on UK 2-year government bonds went up as high as 0.158% on September 20th, after which it closed at 0.117% to lose 2.4 basis points (0.024 percentage point) compared to September 19th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.783% on September 20th, or the highest level since September 14th (0.802%), after which it fell to 0.774% at the close to lose 0.004 percentage point compared to September 19th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, widened to 0.657% on September 20th from 0.637% on September 19th. The September 20th yield spread has been the largest one since September 5th, when the difference was 0.665%.
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 – 1.2999
R2 – 1.3010
R3 (Range Resistance – Sell) – 1.3021
R4 (Long Breakout) – 1.3054
R5 (Breakout Target 1) – 1.3093
R6 (Breakout Target 2) – 1.3108
S1 – 1.2977
S2 – 1.2966
S3 (Range Support – Buy) – 1.2955
S4 (Short Breakout) – 1.2922
S5 (Breakout Target 1) – 1.2883
S6 (Breakout Target 2) – 1.2868
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.3117
R1 – 1.3236
R2 – 1.3469
R3 – 1.3588
R4 – 1.3708
S1 – 1.2884
S2 – 1.2765
S3 – 1.2532
S4 – 1.2300
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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