Forex Market: GBP/USD daily trading outlook

Yesterday’s trade saw GBP/USD within the range of 1.4661-1.4815. The pair closed at 1.4712, shedding 0.15% on a daily basis. It has been the fourth drop in the past five trading days and also a second consecutive one. The daily low has been the lowest level since April 14th 2015, when a low of 1.4601 was registered.

At 7:52 GMT today GBP/USD was down 0.02% for the day to trade at 1.4711. The pair touched a daily low at 1.4707 at 7:53 GMT, testing the 1.4700-1.4710 area for a third time in the past several hours of trade. In case the pair breaks below the psychological 1.4700 level, the next support may be at the low from January 4th (1.4661), then – at the round 1.4650 level, and finally – at the low from April 14th (1.4601). Resistance may be encountered in the 1.4735-1.4750 area.

On Tuesday GBP/USD trading may be influenced by the following macroeconomic report as listed below.

Fundamentals

United Kingdom

Construction PMI by Markit/CIPS

Activity in United Kingdom’s sector of construction probably increased at a faster pace in December, with the corresponding Purchasing Managers’ Index coming in at 56.0, up from a reading of 55.3 in November. The latter has been the lowest PMI level since April 2015, when the gauge was reported at 54.2. If expectations were met, December would be the 32nd consecutive month, when the gauge inhabited the area above 50.0. The index is based on a survey, encompassing managers of companies, operating in the construction sector. They are asked about their estimate regarding current business conditions (new orders, output, employment, demand in the future). Values above the key level of 50.0 signify predominant optimism in regard to business conditions. In case the PMI rose more than anticipated in December, this would have a moderate bullish effect on the sterling. The Chartered Institute of Purchasing and Supply (CIPS) is to release the official index reading at 9:30 GMT.

Daily and Weekly Pivot Levels

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

Central Pivot Point – 1.4729
R1 – 1.4798
R2 – 1.4883
R3 – 1.4952

S1 – 1.4644
S2 – 1.4575
S3 – 1.4490

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

Central Pivot Point – 1.4800
R1 – 1.4874
R2 – 1.5008
R3 – 1.5082

S1 – 1.4666
S2 – 1.4592
S3 – 1.4458