Friday’s trade saw GBP/USD within the range of 1.5028-1.5109. The pair closed at 1.5037, shedding 0.43% on a daily basis, while extending the loss from Thursday. The daily low has been the lowest level since November 6th, when a low of 1.5023 was registered. In weekly terms, GBP/USD plunged 1.02% last week, or at the sharpest rate since the week ended on November 8th, when the pair lost 2.46%. GBP/USD has depreciated 2.56% so far during the current month.
At 7:46 GMT today GBP/USD was gaining 0.12% for the day to trade at 1.5048. The pair touched a daily high at 1.5050 at 7:45 GMT, undershooting the daily R2 level.
Today GBP/USD trading may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
United Kingdom
Consumer lending, Mortgage approvals
Lending to consumers in the United Kingdom probably expanded to GBP 1.300 billion in October from GBP 1.261 billion in September. If so, this would be the highest amount borrowed by individuals since May 2008, when a figure of GBP 1.3 billion was reported as well. This indicator represents borrowing by the UK personal sector (individuals only) to fund current expenditures on goods and services, which are a driving force behind economic growth. Within a booming economy, excessively high levels of consumer lending may be taken as an indication that economy itself is set to overheat. It is so, because individuals tend to borrow money in order to live beyond their means. Within a sluggish economy, however, in case lending to individuals expanded more than projected, this would usually have a moderate bullish effect on the sterling. Bank of England (BoE) is to release the official numbers at 9:30 GMT.
At the same time, the number of mortgage approvals in the United Kingdom probably rose to 69 900 in October, according to experts’ expectations, from 68 874 in September. The latter has been the lowest number of mortgages approved since July 2015, when a level of 68 764 was reported. Mortgage approvals are considered as a leading indicator, reflecting the health of the country’s housing market. In case the number of mortgages approved increased more than anticipated, this would imply potentially higher demand in the nations housing sector and, respectively, a positive impulse for overall economy. Therefore, the national currency would also be supported. Bank of England will release the official data at 9:30 GMT.
United States
Chicago Manufacturing Survey
The Chicago Purchasing Managers Index (PMI) probably slowed down to a reading of 55.0 in November, according to market expectations, from 56.2 during the prior month. The latter has been the highest reading since January 2015, when the PMI came in at 59.4. The index reflects business conditions in the regions manufacturing sector and is interrelated with the Manufacturing Index, published by the Institute for Supply Management (ISM). A reading below the key level of 50.0 is indicative of pessimism (contraction in manufacturing activity). In case the PMI slowed down more than forecast, this would have a moderate bearish effect on the US dollar. The MNI Deutsche Börse Group will release the official reading of the Chicago barometer at 14:45 GMT.
Pending Home Sales
The index of pending home sales in the United States probably rose for the first time in three months in October, going up at a monthly rate of 1.0%, according to the median estimate by experts. In September pending home sales unexpectedly fell 2.3%, or at the sharpest rate since December 2014, when a 3.7% slump was registered.
In annual terms, the index of pending home sales rose 3.0% in September, or at the slowest pace since October 2014, when a climb rate of 2.2% was reported.
When a sales contract is accepted for a property, it is recorded as a pending home sale. As an indicator the index provides information on the number of future home sales, which are in the pipeline. It gathers data from real estate agents and brokers at the point of a sale and is currently the most accurate indicator regarding the US housing sector. It samples over 20% of the market. In addition, over 80% of pending house sales are converted to actual home sales within 2 or 3 months. Therefore, this index has a predictive value about actual home sales.
In case pending home sales increased more than anticipated, this would have a moderate bullish effect on the greenback. The National Association of Realtor’s (NAR) will release the official index value at 15:00 GMT.
Correlation with other Majors
Taking into account the week ended on November 29th and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:
GBP/USD to EUR/USD (0.7025, or strong)
GBP/USD to AUD/USD (0.3328, or moderate)
GBP/USD to NZD/USD (0.3087, or moderate)
GBP/USD to USD/JPY (-0.1240, or weak)
GBP/USD to USD/CAD (-0.4752, or moderate)
GBP/USD to USD/CHF (-0.7025, or strong)
1. During the examined period GBP/USD moved strongly in one and the same direction with EUR/USD, while moving strongly in the opposite direction compared to USD/CHF.
2. EUR/USD moved to a moderate extent in one and the same direction with AUD/USD and NZD/USD during the past week, while moving to a moderate extent in the opposite direction compared to USD/CAD.
3. The correlation between GBP/USD and USD/JPY was insignificant during the period in question.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.608% on November 27th, after which it closed at 0.596% to lose 0.003 percentage point compared to November 26th. It has been the second consecutive trading day of decline.
The yield on US 2-year government bonds climbed as high as 0.942% on November 27th, after which it closed at 0.926% to lose 0.008 percentage point compared to November 26th. It has been the first drop in the past ten trading days.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, shrank to 0.330% on November 27th from 0.335% on November 26th. The November 27th yield spread has been the lowest one since November 25th, when the difference was 0.298%.
Meanwhile, the yield on UK 10-year government bonds soared as high as 1.844% on November 27th, after which it slid to 1.815% at the close to lose 2 basis points (0.02 percentage point) compared to November 26th. It has been the second consecutive trading day of decline.
The yield on US 10-year government bonds climbed as high as 2.231% on November 27th, after which it slipped to 2.222% at the close to lose 0.002 percentage point compared to November 26th. It has been the fifth consecutive trading day of decrease.
The spread between 10-year US and 10-year UK bond yields widened to 0.407% on November 27th from 0.389% on November 26th. The November 27th yield difference has been the largest one since July 7th, when the spread was 0.437%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.5044
R2 – 1.5053
R3 (range resistance) – 1.5060
R4 (range breakout) – 1.5082
S1 – 1.5030
S2 – 1.5022
S3 (range support) – 1.5015
S4 (range breakout) – 1.4992
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.5087
R1 – 1.5147
R2 – 1.5256
R3 – 1.5316
S1 – 1.4978
S2 – 1.4918
S3 – 1.4809
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
