Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.2156-1.2251. The pair closed at 1.2248, edging up 0.48% compared to Tuesdays close. It has been the 169th gain in the past 368 trading days and also the steepest one since October 18th. The major pair has trimmed its slump to 5.62% so far during the current month, after losing 1.23% in September.
At 7:17 GMT today GBP/USD was edging down 0.35% on the day to trade at 1.2205. The pair touched a daily high at 1.2251 during the early phase of the Asian trading session, undershooting the daily R1 level, and a daily low at 1.2200 during early European trade.
On Thursday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United Kingdom
Gross Domestic Product – preliminary estimate
The preliminary estimate of United Kingdom’s GDP probably showed that economy expanded at a rate of 2.1% during the third quarter of the year compared to the same period a year ago. If so, it would match the final growth rate in Q2.
Household consumption expenditure rose at a final rate of 3% in the second quarter of 2016 compared to the same period a year ago, while accelerating from a final 2.7% growth in Q1. Government expenditure was 1.1% higher in Q2, according to final data, while slowing down from a 2.1% growth in Q1. Gross fixed capital formation increased at a final 1% in Q2, accelerating from a 0.3% expansion in the first three months of 2016.
At the same time, UK exports climbed at a final 3.1% year-on-year in Q2, accelerating from a 3% increase in Q1, while the nation’s imports went up at a final 4.7% in Q2, following a 1.6% expansion in the first quarter, the Office for National Statistics said.
On a quarterly basis, the preliminary estimate of UK GDP probably showed a 0.3% growth during Q3 2016, according to market expectations. If so, it would be the slowest quarterly growth since Q1 2013. UK economy expanded at a final 0.7% in Q2 2016, surpassing the preliminary and the second GDP estimates.
In case growth rate came above market expectations in Q3, this would have a strong bullish effect on the Sterling. The Office for National Statistics is expected to release the preliminary GDP estimate at 8:30 GMT.
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 October 21st, probably dropped to 255 000, according to market consensus, from 260 000 in the preceding week. The latter has been the highest number of claims since the business week ended on September 9th.
The 4-week moving average, an indicator lacking seasonal effects, was 251 750, marking an increase by 2 250 compared to the preceding week’s revised up average.
The business week, which ended on October 14th, has been the 85th consecutive week, when jobless claims stood below the 300 000 threshold, which suggested a healthy labor market. It has been the longest streak since 1970.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or decreased further, this would have a moderate bullish effect on the US dollar.
The number of continuing jobless claims probably rose to the seasonally adjusted 2 068 000 during the business week ended on October 14th, according to the median forecast by experts, from 2 057 000 in the preceding week. The latter represented an increase by 7 000 compared to the revised up number of claims reported in the week ended on September 30th. 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.
Durable Goods Orders
The value of durable goods orders in the United States probably went up 0.1% in September from a month ago, according to the median forecast by experts. In August, the index performance has been revised up to a 0.1% gain from flat previously.
The value of shipments of manufactured durable goods, down after two straight months of increases, fell 0.4% (or USD 0.8 billion) to reach USD 231.7 billion in August. The value of unfilled orders for manufactured durable goods, down for a third consecutive month, fell 0.1% (or USD 1.5 billion) to reach USD 1,123.4 billion in August. At the same time, the value of inventories of manufactured durable goods, up for a second consecutive month, went up 0.1% (or USD 0.5 billion) during the period to USD 383.7 billion, according to data by the US Census Bureau.
Non-defense new orders for capital goods slumped 4.4% (or USD 3.1 billion) to USD 66.9 billion in August, while defense new orders for capital goods surged 23.6% (or USD 2.3 billion) during the month to USD 11.9 billion.
The value of durable goods orders, excluding transportation, probably rose 0.2% in September from a month ago, according to expectations, following a revised down 0.2% drop in August.
In case the general index rose at a faster-than-projected rate in September, this would have a strong bullish effect on the US dollar, due to positive implications in regard to the wider gauge of production, factory orders. The US Census Bureau is scheduled to release the official report at 12:30 GMT.
Pending Home Sales
The index of pending home sales in the United States probably rose 1.2% in September from a month ago, according to the median estimate by experts. In August, pending home sales dropped 2.4%, confounding market expectations of a 0.3% increase. In August, sales in the West fell 5.3%, those in the South went down 3.2%, while those in the Midwest region were 0.9% lower. On the other hand, sales in the Northeast area rose 1.3% during the same period.
In annual terms, contracts to buy previously owned homes in the United States were 0.2% fewer in August, following a 1.4% increase in July. The latter has been the sharpest annual increase since April.
In case pending home sales rose at a faster pace than anticipated in September, this would have a moderate bullish effect on the US dollar. The National Association of Realtor’s (NAR) will report on the official index performance at 14:00 GMT.
Bond Yield Spread
The yield on UK 2-year government bonds went up as high as 0.305% on October 26th, or the highest level since June 24th (0.337%), after which it closed at 0.277% to add 2.7 basis points (0.027 percentage point) compared to October 25th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.876% on October 26th, or the highest level since October 12th (0.891%), after which it fell to 0.872% at the close to add 1.6 basis points (0.016 percentage point) compared to October 25th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, narrowed to 0.595% on October 26th from 0.606% on October 25th. The October 26th yield spread has been the lowest one since October 21st, when the difference was 0.580%.
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 – 1.2257
R2 – 1.2265
R3 (Range Resistance – Sell) – 1.2274
R4 (Long Breakout) – 1.2300
R5 (Breakout Target 1) – 1.2331
R6 (Breakout Target 2) – 1.2344
S1 – 1.2239
S2 – 1.2231
S3 (Range Support – Buy) – 1.2222
S4 (Short Breakout) – 1.2196
S5 (Breakout Target 1) – 1.2165
S6 (Breakout Target 2) – 1.2152
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.2233
R1 – 1.2331
R2 – 1.2430
R3 – 1.2528
R4 – 1.2625
S1 – 1.2134
S2 – 1.2036
S3 – 1.1937
S4 – 1.1837
In monthly terms, for GBP/USD we have the following pivots:
Central Pivot Point – 1.3113
R1 – 1.3312
R2 – 1.3645
R3 – 1.3844
R4 – 1.4042
S1 – 1.2780
S2 – 1.2581
S3 – 1.2248
S4 – 1.1914
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