Forex Market: GBP/USD daily trading outlook

Yesterday’s trade saw GBP/USD within the range of 1.5439 – 1.5299. The pair closed the day 0.19% lower at 1.5355, falling for a fourth straight session.

At 07:23 GMT today GBP/USD was down 0.03% for the day to trade at 1.5353. The cross held in a daily range of 1.5339 – 1.5382 and is down 0.9% for the week so far.

Fundamentals

United Kingdom

A report by the British Bankers’ Association (BBA) will likely show that the number of mortgage loans approved in the United Kingdom probably increased to 39 200 in April from 38 800 a month earlier.

The BBA features the major banks in the country, which account for almost 60% of overall mortgage lending. The number of mortgage loans is considered as a leading indicator in regard to UK housing market conditions. As growth in mortgage lending signifies a healthy housing sector, which also contributes to overall economic activity, in case the number of loans rose more than projected, this would boost demand for the sterling. The BBA is to publish the official figure at 08:30 GMT.

The preliminary estimate of United Kingdoms GDP will probably show that the economy expanded at a rate of 2.5% in the first quarter of 2015 compared to the same period a year ago. The British economy grew at an annualized rate of 3.0% in the fourth quarter of 2014, according to final data, following up on a 2.6% expansion in the third quarter. On a quarterly basis, the preliminary estimate of UK GDP will probably show growth of 0.4%, following a 0.6% expansion during the preceding three months.

The GDP represents the total monetary value of all goods and services produced by the nation over a specific period of time. What is more, it is the widest indicator of economic activity in the country. The report on GDP is of huge importance for traders because they will look for higher rates of growth as a sign that interest rates may follow the same direction. Higher interest rates will usually attract more investors, willing to purchase assets in the UK, which in turn will increase demand for the pound. Therefore, in case growth rate were to exceeded market expectations, this would provide support to the local currency. The Office for National Statistics will release the preliminary GDP estimate at 08:30 GMT.

United States

The number of people in the United States who filed for unemployment assistance for the first time during the week ended May 23rd probably dropped to to 270 000 from 274 000 in the previous seven days. The 4-week moving average, an indicator used to iron out week-to-week volatility, was at 266 250 last week, below the previous weeks average.

Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the count of claims dropped more than projected, this would have a bullish effect on the greenback.

The number of continuing jobless claims probably inched down to 2 208 000 during the week ended May 16th from 2 211 000 the previous period. 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 Department of Labor is to release the weekly report at 12:30 GMT.

Also due today, the number of pending home sales in the United States probably rose 0.9% last month, following a 1.1% increase in March.

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 uses data from real estate agents and brokers at the point of a sale of contract 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, thus giving it a predictive value about actual home sales.

The National Association of Realtors (NAR) will release the official index value at 14:00 GMT. In case pending home sales increased more than anticipated, this would have a certain bullish effect on the greenback.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.5364. In case it penetrates the first resistance level at 1.5430, it will encounter next resistance at 1.5504. If breached, upside movement may attempt to advance to 1.5570.

If the cross drops below its S1 level at 1.5290, it will next see support at 1.5224. If the second key support zone is breached, downward movement may extend to 1.5150.

In weekly terms, the central pivot point is at 1.5561. The three key resistance levels are as follows: R1 – 1.5676, R2 – 1.5863, R3 – 1.5978. The three key support levels are: S1 – 1.5374, S2 – 1.5259, S3 – 1.5072.