Forex Market: GBP/USD daily trading outlook

Yesterday’s trade saw GBP/USD within the range of 1.4870-1.4935. The pair closed at 1.4892, losing 0.22% on a daily basis. It has been the first drop in the past three trading days. The daily low was a higher-low test of the low from December 24th.

At 8:51 GMT today GBP/USD was gaining 0.06% for the day to trade at 1.4899. The pair touched a daily high at 1.4914 at 8:20 GMT, overshooting the range resistance level (R3). Resistance may be encountered in proximity to the hourly 200-period EMA (1.4927), while support may be received in the area around the low from December 28th (1.4870).

Today GBP/USD trading may be influenced by one macroeconomic report as listed below.

Fundamentals

United States

Consumer Confidence Index by the CB

Confidence among consumers in the United States probably improved in December, with the corresponding index coming in at a reading of 92.9, according to market expectations, from 90.4 in November. The latter has been the lowest index value since September 2014, when the gauge was reported at 89.0.

This indicator measures the level of individuals confidence in the US economic development. It is considered as a leading indicator, as it gives an early insight into consumer spending, which accounts for most of the nations GDP.

In case the index advanced more than anticipated, this would have a strong bullish effect on the US dollar, as higher confidence suggests a greater willingness to spend and, respectively, an accelerated economic growth. The Conference Board research group is to publish the official index reading at 15:00 GMT.

Bond Yields

The yield on US 2-year government bonds climbed as high as 1.059% on December 28th, or the highest level since April 2010, after which it closed at the exact same level to add 5.3 basis points (0.053 percentage point) compared to December 24th. It has been the 21st gain in the past 30 trading days and also a fourth consecutive one.

Meanwhile, the yield on US 10-year government bonds climbed as high as 2.289% on December 28th, or the highest level since December 16th (2.332%), after which it slipped to 2.232% at the close to lose 1.3 basis points (0.013 percentage point) compared to December 24th. It has been the 19th drop in the past 30 trading days and also a second consecutive one.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:

R1 – 1.4898
R2 – 1.4905
R3 (range resistance) – 1.4911
R4 (range breakout) – 1.4928

S1 – 1.4886
S2 – 1.4880
S3 (range support) – 1.4873
S4 (range breakout) – 1.4856

By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:

Central Pivot Point – 1.4894
R1 – 1.4987
R2 – 1.5040
R3 – 1.5133

S1 – 1.4841
S2 – 1.4748
S3 – 1.4695