Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.3034-1.3159. The pair closed at 1.3138, rising 0.47% compared to Fridays close. It has been the 146th gain in the past 321 trading days. The major pair has trimmed its decline to 0.73% so far during the current month, after losing 0.59% of its value in July.
At 6:49 GMT today GBP/USD was edging up 0.19% on the day to trade at 1.3163. The pair touched a daily high at 1.3175 during the late phase of the Asian trading session, overshooting the range resistance level (R3), and a daily low at 1.3129 during early Asian trade.
On Tuesday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United Kingdom
CBI Industrial Orders
At 10:00 GMT the Confederation of British Industry (CBI) is to release the August results from its survey, encompassing 17 industries. The gauge of industrial orders in the United Kingdom probably fell to a reading of -9 during the three months to August, according to expectations, from -4 in the previous period. If expectations were met, August’s reading would be the lowest since the three-month period to April, when a value of -11 was reported.
This indicator reflects the net balance between companies, which registered an increase in industrial orders during the respective period of three months and those, which reported a drop. It is the oldest indicator, released from the UK private sector, to show the development tendency in the country’s industry. The Industrial Trends Survey by the Confederation of British Industry provides expert qualitative opinion from senior manufacturing executives on past and expected trends in output, exports, prices, costs, investment intentions, business confidence and capacity utilization. A level above zero suggests that volume of orders is projected to increase, while a level below zero indicates that expectations point to lower volumes. If the gauge fell more than projected in August, this would have a limited bearish effect on the Sterling.
United States
Manufacturing PMI by Markit – preliminary reading
Manufacturing activity in the United States probably increased at a slower rate in August, with the corresponding preliminary Purchasing Managers’ Index coming in at a reading of 52.7, according to market expectations. In July the final seasonally adjusted PMI stood at 52.9, while confirming the preliminary reading reported on July 22nd. The latter has been the highest PMI level since October 2015 (54.1), mostly supported by higher rates of growth in production, new orders and employment.
According to Markit’s statement: ”Higher levels of output have been recorded in each of the past two months, with the latest expansion the fastest since November 2015. Anecdotal evidence cited greater inflows of new work and supportive economic conditions.”
”New business growth continued to recover from May’s post-crisis low, with the latest improvement in new order books the strongest for nine months. At the same time, export sales increased at a modest pace in July, which manufacturers linked to successful promotional initiatives and entry into new markets.”
”Payroll numbers increased in July, which continued the upward trend recorded over the past three years. Moreover, the rate of job creation picked up to its strongest since July 2015. Manufacturers noted that faster new business growth and the launch of new products were key factors boosting staff recruitment at their plants.”
Values above the key level of 50.0 indicate optimism (expanding activity). In case the flash manufacturing PMI showed a worse-than-anticipated performance, this would have a moderate bearish effect on the US dollar. The preliminary PMI reading by Markit Economics is due out at 13:45 GMT.
New Home Sales
Sales of new single-family homes probably decreased 2.0% to the seasonally adjusted annual rate of 580 000 in July, according to market expectations, from 592 000 reported in June. The latter has been the highest level since February 2008. Sales in the West rose 10.9% to 152 000 in June, while sales in the Midwest area went up 10.4% to reach 85 000. On the other hand, new home sales in the South area went down 0.3% to 321 000 during the same period, while those in the Northeast region were 5.6% lower to reach 34 000.
The median sales price of new houses sold went up as high as USD 306 700 in June, after being at USD 288 000 in the preceding month. The average sales price rose to USD 358 200 in June from a revised down USD 351 400 in May. At the end of the month, the seasonally adjusted estimate of new houses for sale was 244 000, up 1.2% from a month ago. It represents a supply of 4.9 months at the current sales rate, according to the report by the US Census Bureau.
In case the index decreased more than anticipated, this would have a strong bearish effect on the US Dollar. The Census Bureau is to report the official figure at 14:00 GMT.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.166% on August 22nd, after which it closed at 0.141% to lose 1.8 basis points (0.018 percentage point) compared to August 19th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.783% on August 22nd, or the highest level since June 23rd (0.787%), after which it fell to 0.746% at the close to lose 0.004 percentage point compared to August 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 0.605% on August 22nd from 0.591% on August 19th. The August 22nd yield spread has been the largest one since August 9th, when the difference was 0.606%.
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 – 1.3149
R2 – 1.3161
R3 (Range Resistance – Sell) – 1.3172
R4 (Long Breakout) – 1.3207
R5 (Breakout Target 1) – 1.3247
R6 (Breakout Target 2) – 1.3264
S1 – 1.3127
S2 – 1.3115
S3 (Range Support – Buy) – 1.3104
S4 (Short Breakout) – 1.3069
S5 (Breakout Target 1) – 1.3029
S6 (Breakout Target 2) – 1.3012
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.3043
R1 – 1.3220
R2 – 1.3363
R3 – 1.3540
R4 – 1.3717
S1 – 1.2900
S2 – 1.2723
S3 – 1.2580
S4 – 1.2437
In monthly terms, for GBP/USD we have the following pivots:
Central Pivot Point – 1.3171
R1 – 1.3546
R2 – 1.3858
R3 – 1.4233
R4 – 1.4608
S1 – 1.2859
S2 – 1.2484
S3 – 1.2172
S4 – 1.1860
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