Forex Market: GBP/USD daily trading outlook

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 1.4530-1.4643. The pair closed at 1.4622, shedding 0.03% on a daily basis. It has been the seventh drop in the past eight trading days and also a fifth consecutive one. The daily low has been the lowest level since June 11th 2010, when a low of 1.4505 was registered.

At 8:25 GMT today GBP/USD was up 0.01% for the day to trade at 1.4623. The pair touched a daily low at 1.4604 at 8:05 GMT and a daily high at 1.4646 during mid-Asian trading session. Support may be received in the area around the low from January 7th (1.4530) and then – at the low from June 11th 2010 (1.4505). Resistance may be encountered at the hourly 55-period EMA (1.4628) and then – in the area around the current daily high (1.4646).

On Friday GBP/USD trading may be influenced by the following macroeconomic reports listed below.

Fundamentals

United Kingdom

Balance of Trade

The deficit on United Kingdom’s goods trade balance probably narrowed to GBP 10.500 billion in November, according to market expectations, from a deficit figure of GBP 11.827 billion during the preceding month. The latter has been the largest trade deficit in at least 8 years.

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 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 nation’s total trade balance expanded to GBP 4.14 billion in October from a revised down GBP 1.07 billion deficit posted in September. Total exports contracted 1.6% to reach GBP 42.18 billion, with all of the decrease attributed to goods, specifically chemicals (down by GBP 0.8 billion), according to the report by the Office for National Statistics (ONS). UK imports expanded 5.4% to reach GBP 46.32 billion during September.

In case the UK trade deficit narrowed more than anticipated, this would have a moderate bullish effect on the sterling, because of the positive implications regarding the nation’s GDP. The Office for National Statistics will release the official trade data at 9:30 GMT.

United States

Non-farm Payrolls, Unemployment rate, Average Earnings per Hour

Employers in all sectors of economy in the United States, excluding the farming industry, probably added 200 000 new jobs in December, according to the median forecast by experts, after a job gain of 211 000 in November.

Employment rose the most in the sector of construction in November (+46 000). Employment in professional and technical services increased by 28 000, while employers in health care added 24 000 new jobs during the same month. Employment in food services and drinking places continued the uptrend in November (+32 000), as well as employment in retail trade (+31 000). On the other hand, employment in US mining sector continued the downtrend in November (-11 000), according to the report by the Bureau of Labor Statistics (BLS). Employment in other key industries, namely manufacturing, wholesale trade, transportation and warehousing, financial activities, and government, remained little changed during the month.

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, released most often, varies between 10 000 and as much as 250 000 – 300 000 at times when 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 larger-than-expected gain in jobs in December, demand for the US dollar would be strongly supported.

Average Hourly Earnings probably increased 0.2% in December compared to the prior month, according to market expectations, following another 0.2% surge in November. Average earnings per hour for all employees on private non-farm payrolls reached USD 25.25 in November (up 4 cents compared to October).

The rate of unemployment in the country probably remained at 5.0% for a third consecutive month in December, according to expectations. It has been the lowest level since April 2008, when a rate of 5.0% was reported as well.

The total number of people unemployed was almost unchanged at 7.9 million in November. The unemployment rate for adult men (4.7%), adult women (4.6%), teenagers (15.7%), whites (4.3%), blacks (9.4%), Asians (3.9%), and Hispanics (6.4%) showed little or no change during the month. The number of long-term unemployed (those looking for employment for 27 weeks or more) was almost unchanged at 2.1 million during November and comprised 25.7% of the unemployed, according to the BLS.

In case the unemployment rate met expectations or even fell further, this would have a considerable bullish effect on the US dollar, because of the positive implications for consumer spending. The Bureau of Labor Statistics will release the official employment data at 13:30 GMT.