Forex Market: GBP/USD daily trading outlook

Yesterday’s trade saw GBP/USD within the range of 1.5276-1.5162. The pair closed 0.01% higher at 1.5246, rising for a third day.

At 07:52 GMT today GBP/USD was up 1.56% for the day to trade at 1.5483. The cross held in a daily range between 1.5245 and 1.5522.

Fundamentals

United Kingdom

A survey by Halifax Bank of Scotland (HBOS), the largest mortgage lender in the United Kingdom, showed that home values rose at the annualized pace of 8.5% in April, compared to 8.1% in March. In monthly terms, house prices increased by 1.6% from an upward-revised 0.6% in March.

Later in the day, the Office for National Statistics will report that the UK trade deficit likely narrowed to 9.80 billion pounds in March from 10.34 billion a month earlier, which was the largest since September 2014 when a gap of -10.51 billion was reported.

This indicator is also known as visible trade balance, because it reflects the difference in value between exported and imported physical goods, without the inclusion of exported and imported services. Since the UK economy is to a great extent dependent on trade, the visible trade balance is considered as a key factor, providing clues over the sustainability of economic growth.

The gap on the nations total trade balance probably shrank to 2.4 billion in March from a revised 2.859 billion posted in February when exports fell to a six-month low due to weaker sales to the United States. In case the UK trade deficit narrowed more than anticipated, this would provide support to the pound. The data are due out at 08:30 GMT.

United States

Employers in all sectors of the United States economy, excluding the farming industry, probably added 224 000 new jobs in April, according to the median forecast by experts, after a job gain of 126 000 in March, which was the lowest since January 2014.

The non-farm payrolls report presents the total number of US employees in any business, excluding the following four groups: farm employees, general government employees, employees of non-profit organizations, private household employees. The reading typically varies between 10 000 and as much as 250 000 – 300 000 at times when the economy is performing well. Despite the volatility and the possibility of large revisions, the non-farm payrolls indicator presents the most timely and comprehensive reflection of the current economic state. Total non-farm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a lesser-than-expected gain in jobs, the US dollar would certainly see selling pressure.

The jobs report is also expected to show that average hourly earnings probably increased 0.2% last month after a 0.3% jump in March, which would be a fourth straight monthly increase, while average weekly hours were likely flat at 34.5.

The rate of unemployment in the country probably dropped to 5.4% from 5.5% in March. If confirmed, this would be the lowest since April 2008.

The unemployment rate represents the percentage of the eligible work force that is unemployed, but is actively seeking employment. A person who is not classified as employed or unemployed is excluded from the statistics. One counts as unemployed, if they fall in all of the following categories: he/she was unemployed during the last week; he/she is able bodied; he/she has been seeking employment for a period of at least four weeks, which end during the week when the research is conducted. People who have been laid off and are awaiting to be hired again are also classified as unemployed. In case the unemployment rate met expectations or even fell further, this would have a bullish effect on the greenback, because of the positive implications for consumer spending. The Bureau of Labor Statistics will release the official employment data at 12:30 GMT.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.5228. In case it penetrates the first resistance level at 1.5294, it will encounter next resistance at 1.5342. If breached, upside movement may attempt to advance to 1.5408.

If the cross drops below its S1 level at 1.5180, it will next see support at 1.5114. If the second key support zone is breached, downward movement may extend to 1.5066.

In weekly terms, the central pivot point is at 1.5248. The three key resistance levels are as follows: R1 – 1.5391, R2 – 1.5641, R3 – 1.5784. The three key support levels are: S1 – 1.4998, S2 – 1.4855, S3 – 1.4605.