Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.3028-1.3123. The pair closed at 1.3078, edging up 0.37% compared to Wednesdays close. It has been the 159th gain in the past 344 trading days and also a second consecutive one. The daily high has been a level unseen since September 16th, when a high of 1.3249 was registered. The major pair has pared its drop to 0.46% so far during the current month, after losing 0.72% in August.
At 8:00 GMT today GBP/USD was edging down 0.46% on the day to trade at 1.3018. The pair touched a daily high at 1.3090 during the early phase of the Asian trading session, overshooting the daily R1 level, and a daily low at 1.3001 during early European trade.
On Friday GBP/USD trading may be influenced by the following reports and other events as listed below.
Fundamentals
United States
Manufacturing PMI by Markit – flash reading
Activity in US manufacturing sector probably rose at a slightly lower rate in September from a month ago. The corresponding preliminary Manufacturing PMI probably slowed down to a reading of 51.9 in the current month, according to the median forecast by analysts, from a final 52.0 in August.
According to the final report by Markit, released in August, “Manufacturers indicated a further solid increase in production volumes during the latest survey period, with the pace of expansion the joint-fastest since November 2015. Anecdotal evidence suggested that improving economic conditions and sustained new business growth had led to increased production schedules. The latest upturn in new orders was slower than the nine-month peak seen in July, despite new export sales rising at the steepest pace since September 2014.”
“Relatively subdued new order growth led to a weaker pace of staff hiring across the manufacturing sector in August. The latest increase in payroll numbers was only marginal and the least marked since April.”
“The latest survey indicated a reduction in stocks of finished goods for the third month running. A number of firms noted that post-production inventories were depleted in response to softer new business growth and caution regarding the demand outlook. Stocks of inputs were also reduced in August, although at the slowest rate since February”, Markit stated.
Values above the key level of 50.0 indicate predominant optimism (expanding activity). In case the flash PMI for September came in line with expectations or decelerated even further, this would cause a moderate bearish impact on the US dollar. The preliminary reading is due out at 13:45 GMT.
Fed Speakers
At 16:00 GMT Federal Open Market Committee members Harker, Lockhart and Mester are to take a statement. Any remarks in regard to the Bank’s policy stance or US economic outlook would certainly heighten USD volatility.
Bond Yield Spread
The yield on UK 2-year government bonds went up as high as 0.125% on September 22nd, after which it closed at 0.094% to lose 1.9 basis points (0.019 percentage point) compared to September 21st.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.787% on September 22nd, after which it fell to 0.779% at the close to add 0.001 percentage point compared to September 21st.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, widened to 0.685% on September 22nd from 0.665% on September 21st. The September 22nd yield spread has been the largest 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 – 1.3087
R2 – 1.3095
R3 (Range Resistance – Sell) – 1.3104
R4 (Long Breakout) – 1.3130
R5 (Breakout Target 1) – 1.3161
R6 (Breakout Target 2) – 1.3173
S1 – 1.3069
S2 – 1.3061
S3 (Range Support – Buy) – 1.3052
S4 (Short Breakout) – 1.3026
S5 (Breakout Target 1) – 1.2995
S6 (Breakout Target 2) – 1.2983
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