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Forex Market: GBP/USD daily trading outlook

Friday’s trade saw GBP/USD within the range of 1.4202-1.4364. The pair closed at 1.4265, going up 0.33% on a daily basis. It has been the 5th gain in the past 15 trading days and also a third consecutive one. The daily high has been the highest level since January 15th, when a high of 1.4431 was registered. In weekly terms, GBP/USD inched up 0.05% last week, marking its first increase in the past four weeks. The pair, on the other hand, has depreciated 3.41% so far during the current month, following two consecutive months of decline.

At 9:38 GMT today GBP/USD was up 0.08% for the day to trade at 1.4264. The pair touched a daily high at 1.4310 during mid-Asian trading session, making an exact test of the range resistance level (R3), and a daily low at 1.4235 at 9:07 GMT. The pair may find resistance at the hourly 21-period EMA (1.4277) and then – at the hourly 200-period EMA/the current daily high (1.4303/1.4310). Support may be received within the 1.4235-1.4250 area, while a break and close below it may target the low from January 22nd (1.4202).

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

Fundamentals

United Kingdom

CBI Industrial Trend Orders

At 11:00 GMT the Confederation of British Industry (CBI) will announce the results from its January survey, encompassing 17 major industries. The gauge of industrial orders in the UK stood in negative territory for an 8th consecutive period in the three months to December, as it came in at a reading of -7, improving from -11 in the three-months to November.

This indicator reflects the net balance between companies, that registered an increase in industrial orders during the respective period of three months and those, that registered a drop. It is the oldest indicator, released from the UK private sector, to show the development tendency in the countrys industry. The Industrial Trends Survey by the Confederation of British Industry provides expert qualitative opinion from senior manufacturing executives, on past and expected trends in output, exports, prices, costs, investment intentions, business confidence and capacity utilization. A level above zero suggests that volume of orders is projected to increase, while a level below zero indicates that expectations point to lower volumes. If the survey showed predominant pessimism for a 9th consecutive period, this would have a limited bearish effect on the sterling.

Correlation with other Majors

Taking into account the week ended on January 22nd and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:

GBP/USD to USD/CHF (0.7751, or strong)
GBP/USD to NZD/USD (0.6398, or strong)
GBP/USD to USD/JPY (0.5625, or strong)
GBP/USD to AUD/USD (0.3681, or moderate)
GBP/USD to USD/CAD (-0.6478, or strong)
GBP/USD to EUR/USD (-0.7622, or strong)

1. During the examined period GBP/USD moved strongly in one and the same direction with USD/JPY, NZD/USD and USD/CHF.

2. GBP/USD moved strongly in the opposite direction compared to USD/CAD and EUR/USD during the past week.

3. The correlation between GBP/USD and AUD/USD was moderate.

Daily and Weekly Pivot Levels

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

R1 – 1.4280
R2 – 1.4295
R3 (range resistance) – 1.4310
R4 (range breakout) – 1.4354

S1 – 1.4250
S2 – 1.4235
S3 (range support) – 1.4220
S4 (range breakout) – 1.4176

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

Central Pivot Point – 1.4236
R1 – 1.4393
R2 – 1.4521
R3 – 1.4678

S1 – 1.4108
S2 – 1.3951
S3 – 1.3823

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