Forex Market: GBP/USD daily trading forecast

Yesterday’s trade saw GBP/USD within the range of 1.6614-1.6567. The pair closed at 1.6588, adding 0.08% on a daily basis.

At 8:19 GMT today GBP/USD was up 0.09% for the day to trade at 1.6602. The pair held in a daily range between 1.6580 and 1.6608.

Fundamental view

United States

The Commerce Department’s Bureau of Economic Analysis is expected to report that its Core Personal Consumption Expenditure (PCE) Price Index rose by 0.1% in July on a monthly basis after gaining 0.1% in June. Year-on-year, Core PCE added 1.5% in June.

The general PCE Price Index added 0.2% in June on a monthly basis, while year-on-year it was up 1.6% in June.

Personal spending is projected to have jumped by 0.2% in July from a month earlier, when the index registered 0.4% growth. Personal income likely gained 0.3% in July, down from 0.3% during the preceding month.

A separate report prepared by MNI Deutsche Börse Group may show that manufacturing activity in the Chicago region expanded in August for the 16th straight month. The respective Chicago PMI index is projected to come in at 56.0 after sliding to 52.6 in July from 62.6 in June.

The monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States worsened in August. The corresponding index probably slid to 81.0 during the current month from 81.8 in July. A preliminary reading earlier in the month pointed to a decline to 79.2.

The survey encompasses about 500 respondents throughout the country. The index is comprised by two major components, a gauge of current conditions and a gauge of expectations. The current conditions index is based on the answers to two standard questions, while the index of expectations is based on three standard questions. All five questions have an equal weight in determining the value of the overall index. In case the gauge of consumer sentiment showed a larger improvement than projected, this would boost demand for the dollar. The official reading is due out at 13:55 GMT.

United Kingdom

In the UK, Nationwide reported that housing prices surged 11.0% on an annual basis in August, compared to 10.6% in July. Month-on-month, prices of homes with mortgages backed by Nationwide rose by 0.8%, outstripping the previous month’s upward-revised 0.2% rise.

Separately, the Office for National Statistics is expected to report that business investments improved in the second quarter. According to preliminary data, the respective indicator is projected to come in at an annualized 10.8%, up from 10.6% in the previous three months, while on a quarterly basis business investments probably rose by 2%, compared to 5% in Q1.

Business Investment indicator measures the change in the total inflation-adjusted value of capital expenditures made by private companies. Robust growth in business investments are indicative of overall growth and activity in the UK economy. As such, rising and better-than-expected values of the indicator as seen as bullish for the pound, and vice versa.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.6590. In case GBP/USD manages to breach the first resistance level at 1.6612, it will probably continue up to test 1.6637. In case the second key resistance is broken, the pair will probably attempt to advance to 1.6659.

If GBP/USD manages to breach the first key support at 1.6565, it will probably continue to slide and test 1.6543. With this second key support broken, the movement to the downside will probably continue to 1.6518.

The mid-Pivot levels for today are as follows: M1 – 1.6531, M2 – 1.6554, M3 – 1.6578, M4 – 1.6601, M5 – 1.6625, M6 – 1.6648.

In weekly terms, the central pivot point is at 1.6624. The three key resistance levels are as follows: R1 – 1.6685, R2 – 1.6800, R3 – 1.6861. The three key support levels are: S1 – 1.6509, S2 – 1.6448, S3 – 1.6333.