Yesterday’s trade saw GBP/USD within the range of 1.4378-1.4516. The pair closed at 1.4461, edging up 0.19% on a daily basis. It has been the 10th gain in the past 27 trading days.
At 8:09 GMT today GBP/USD was inching up 0.03% for the day to trade at 1.4466. The pair touched a daily low at 1.4451 at 8:01 GMT, undershooting the daily S1 level, and a daily high at 1.4486 at 7:35 GMT.
On Wednesday GBP/USD trading may be influenced by the following macroeconomic reports and other events as listed below.
Fundamentals
United Kingdom
Industrial, Manufacturing Production
Annualized industrial production in the United Kingdom probably expanded 1.0% in December, according to market expectations. If so, December would be the 27th consecutive month, when the annual production index rose. In monthly terms, industrial production probably fell 0.1% in December, according to expectations, following a 0.7% drop in November. The latter has been the sharpest monthly decrease since January 2013. Within the index, the largest increase was observed in the gauge for electricity and gas (down 2.1% month-over-month) and the gauge for mining and quarrying (down 1.6%). The index of industrial output 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 suggest inflationary pressure build-up.
United Kingdom’s annualized manufacturing production, a short-term indicator which accounts for almost 80% of the nation’s industrial output, probably shrank 1.4% in December, according to the median forecast by analysts. If so, December would be the sixth consecutive month of contraction. In November manufacturing output fell at an annualized rate of 1.2%, or the steepest since May 2013. In monthly terms, manufacturing production probably grew 0.1% in December, according to expectations, following a 0.4% contraction in November. As it is a key component of the country’s Gross Domestic Product, in case annual manufacturing production shrank more than projected, this would have a moderate bearish effect on the sterling. The Office for National Statistics (ONS) will release the official industrial report at 9:30 GMT.
GDP estimate by the NIESR
At 15:00 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 January. During the three-month period to December the NIESR estimate pointed to a 0.6% GDP growth, which matched the estimate regarding the three-month periods to October and to November. The report is considered as highly reliable and usually heightens volatility of the pairs containing the pound.
United States
Fed Chair Janet Yellen’s testimony
At 15:00 GMT Federal Reserve Chair, Janet Yellen, is expected to testify before the US Congress. After the testimony a Questions and Answers session will be held, which may trigger high volatility in US stock markets as well as in the Foreign Exchange Market.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.4474
R2 – 1.4486
R3 (range resistance) – 1.4499
R4 (range breakout) – 1.4537
S1 – 1.4448
S2 – 1.4436
S3 (range support) – 1.4423
S4 (range breakout) – 1.4385
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4466
R1 – 1.4707
R2 – 1.4912
R3 – 1.5153
S1 – 1.4261
S2 – 1.4020
S3 – 1.3815
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