Yesterday’s trade saw GBP/USD within the range of 1.4254-1.4399. The pair closed at 1.4329, edging up 0.22% on a daily basis. It has been the 13th gain in the past 34 trading days and also the sharpest one since February 10th, when the pair added 0.34%.
At 7:21 GMT today GBP/USD was inching down 0.03% for the day to trade at 1.4324. The pair touched a daily low at 1.4312 at 7:10 GMT, overshooting the daily S1 level, and a daily high at 1.4346 during the early phase of the Asian trading session.
On Friday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United Kingdom
Retail Sales
Annualized retail sales in the United Kingdom probably rose at a rate of 3.6% in January, according to the median forecast by experts, after in December sales increased by another 2.6%. If so, January would be the 34th consecutive month of sales growth.
In monthly terms, retail sales probably rose 0.8% in January, according to market expectations. In December retail sales slumped 1.0%, or the most since January 2014, when the indicator went down at a monthly rate of 2.0%. Decembers fall came as a result of lower sales of fuel (-3.8%), textile, clothing and footwear (-3.0%) and household goods (-0.2%).
Annualized retail sales, without taking into account fuel sales, probably surged 3.5% in January, following a 2.1% increase in December. If expectations were met, January would be the 45th consecutive month of growth in annual core sales.
Retail sales represent a short-term indicator, which provides key information about consumption on a national scale. Higher retail sales suggest stronger consumer demand, confidence and economic growth, respectively. Therefore, in case the general index of retail sales increased at a faster-than-expected pace, this would be pound positive. The Office for National Statistics is expected to publish the official report at 9:30 GMT.
United States
Consumer Price Inflation
The annualized consumer inflation in the United States probably accelerated to 1.3% in January, according to market expectations, from 0.7% in December. If so, it would be the highest rate of inflation since November 2014, when the annual CPI rose 1.3%. In monthly terms, the Consumer Price Index (CPI) probably fell 0.1% in January, following another 0.1% dip in the preceding month.
In December upward pressure came from cost of services less energy (up 2.9% year-on-year and matching the gain rate in November). Within the category, cost of shelter went up 3.2% year-on-year, cost of medical care rose 2.9% and cost of transportation services increased 2.6%. Additionally, consumers paid more for food in December (up at an annualized rate of 0.8%, but slowing down from a 1.3% increase in November), according to the report by the Bureau of Labor Statistics. The largest downward pressure on the annual CPI came from prices of energy (down 12.6% in December from a year ago, or a lesser decline compared to November).
The annualized core consumer inflation, which is stripped of prices of food and energy, probably remained at 2.1% for a second consecutive month in January, according to expectations. This has been the highest core inflation since July 2012. It is usually reported as a seasonally adjusted figure, because consumer patterns are widely fluctuating in dependence on the time of the year. The Core CPI is the gauge, which the Federal Reserve Bank takes into account in order to adjust its monetary policy stance. The Fed uses the core CPI, because prices of food, oil and gas are highly volatile, while the central bank’s tools are slow-acting. In case, for example, prices of oil plunge considerably (as is the present situation), this could result in a low rate of inflation, but the central bank will not take action until this decrease affects prices of other goods and services.
If the general CPI tends to approach the inflation objective, set by the Federal Reserve and considered as providing price stability, or a level below but close to 2%, this will usually bolster the appeal of the US dollar, as it heightens the probability of monetary policy tightening.
The Bureau of Labor Statistics is to release the official CPI report at 13:30 GMT.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.4342
R2 – 1.4356
R3 (range resistance) – 1.4369
R4 (range breakout) – 1.4409
S1 – 1.4316
S2 – 1.4301
S3 (range support) – 1.4289
S4 (range breakout) – 1.4249
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4479
R1 – 1.4608
R2 – 1.4708
R3 – 1.4837
S1 – 1.4379
S2 – 1.4250
S3 – 1.4150
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