Forex Market: GBP/USD daily trading forecast

Written by Miroslav Marinov

Miroslav Marinov, a financial news editor at TradingPedia, is engaged with observing and reporting on the tendencies in the Foreign Exchange Market, as currently his focus is set on the major currencies of eight developed nations worldwide.

, | Updated: October 30, 2024

Yesterday’s trade saw GBP/USD within the range of 1.5137-1.5248. The pair closed at 1.5227, soaring 0.55% on a daily basis, or at the most considerable rate since September 17th, when it appreciated 0.63%. The daily high has been the highest level since September 25th, when the cross registered a high of 1.5261.

At 7:23 GMT today GBP/USD was up 0.26% for the day to trade at 1.5268. The pair came in proximity to the upper range breakout level (R4), as it touched a daily high at 1.5271 at 7:22 GMT. It has been the highest level since September 24th, when a daily high of 1.5289 was reached.

Today the cross may be influenced by a number of macroeconomic reports as listed below.

Fundamentals

United Kingdom

Industrial, Manufacturing Production

Annualized industrial production in the United Kingdom probably expanded 1.2% in August, according to market expectations, following a 0.8% gain during the preceding month. If so, this would be the 23rd consecutive month, when the annual production index rose. In monthly terms, industrial production probably increased 0.2% in August, according to expectations, following two consecutive months of decline. The index measures the change in the total inflation-adjusted value of production in sectors such as manufacturing, mining and utilities. Higher rates of increase in industrial production may imply inflationary pressure.

United Kingdom’s annualized manufacturing production, a short-term indicator which accounts for almost 80% of the nation’s industrial output, probably shrank for a second straight month in August, going down 0.1%, according to the median forecast by analysts. In July manufacturing output fell at an annualized rate of 0.5%, following 22 successive months of expansion. In monthly terms, production probably grew 0.3% in August, according to expectations, following a 0.8% slump in July. As it is a key component of the country’s Gross Domestic Product, in case manufacturing production contracted more than projected, this would have a moderate bearish effect on the sterling. The Office for National Statistics (ONS) will release the official industrial data at 8:30 GMT.

GDP estimate by NIESR

At 14:00 GMT the National Institute of Economic and Social Research (NIESR) will release its estimate in regard to UK Gross Domestic Product over the three months to September. During the three-month period to August the NIESR estimate pointed to a 0.5% GDP growth. The report is considered as quite reliable and usually heightens volatility of the pound crosses.

United States

Consumer credit change

The money amounts, borrowed by consumers probably decreased to USD 19.0 billion in August, according to market expectations, from USD 19.1 billion in July. Given the current state of the economy, a higher-than-expected amount borrowed is usually considered as dollar positive, as it implies a potential increase in consumer spending and accelerated growth, respectively. The Board of Governors of the Federal Reserve is to release the official numbers at 19:00 GMT.

Bond Yield Spread

The yield on UK 2-year government bonds went as high as 0.635% on October 6th, or the highest level since September 25th (0.655%), after which it closed at 0.604% to add 1.9 basis points (0.019 percentage point) compared to October 5th, while marking a second straight trading day of increase.

The yield on US 2-year government bonds climbed as high as 0.613% on October 6th, after which it fell to 0.605% at the close to lose 0.004 percentage point compared to October 5th.

The spread between 2-year US and 2-year UK bond yields shrank to 0.001% on October 6th from 0.024% on October 5th.

Meanwhile, the yield on UK 10-year government bonds soared as high as 1.839% on October 6th, or the highest level since September 25th (1.855%), after which it slid to 1.800% at the close to add 1.7 basis points (0.017 percentage point) compared to October 5th. It has been the second consecutive trading day of increase.

The yield on US 10-year government bonds climbed as high as 2.077% on October 6th, or the highest level since September 30th (2.104%), after which it slipped to 2.035% at the close to lose 2.3 basis points (0.023 percentage point) compared to October 5th.

The spread between 10-year US and 10-year UK bond yields shrank to 0.235% on October 6th from 0.275% on October 5th. The October 6th yield difference has been the lowest one since September 17th, when the spread was 0.234%.