Friday’s trade saw GBP/USD within the range of 1.4259-1.4308. The pair closed at 1.4263, plummeting 0.99% on a daily basis. It has been the 22nd drop in the past 35 trading days and also the sharpest one since January 15th, when the pair lost 1.08%. In weekly terms, GBP/USD fell 0.70% last week, marking the first drop in the past three weeks and also the steepest one since the week ended on January 17th, when a 1.80% slump was registered. GBP/USD has lost 0.17% of its value so far during the current month.
At 7:26 GMT today GBP/USD was losing 0.34% for the day to trade at 1.4215. The pair touched a daily low at 1.4206 at 7:15 GMT, overcoming the lower range breakout level, and a daily high at 1.4308 during the early phase of the Asian trading session.
On Monday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United Kingdom
CBI Industrial Trends Survey
At 11:00 GMT the Confederation of British Industry (CBI) will announce the results from its February survey, encompassing 17 major industries. The gauge of industrial orders in the UK stood in negative territory for a 9th consecutive period in the three months to January, as it came in at a reading of -15, falling from -7 in the three-months to December.
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 country’s 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 10th consecutive period, this would have a limited bearish effect on the sterling.
United States
Manufacturing PMI by Markit – preliminary reading
Manufacturing activity in the United States probably was little changed in February, with the corresponding preliminary Purchasing Managers’ Index coming in at a reading of 52.5, according to market expectations. If so, this would be the highest reading since November 2015, when the PMI was reported at a final 52.8. In January the final seasonally adjusted PMI stood at 52.4, down from a preliminary 52.7.
According to Markit’s statement: ”Production volumes were reported to have increased at a solid pace in January, with the rate of expansion accelerating from December’s recent low. Reports from survey respondents cited improved spending patterns, in particular from domestic clients. Reflecting this, latest data pointed to a rebound in new business growth to its fastest for three months.”
”Payroll numbers expanded again at the start of the year, but the rate of job creation eased since December and was slightly slower than seen during 2015 as a whole. Some firms indicated that caution about the business outlook had held back staff hiring in January. Meanwhile, manufacturers also reported a slight drop in pre-production inventories and broadly unchanged stocks of finished goods at their plants. Growth of input buying also remained subdued, with the latest rise in purchasing activity the second-slowest recorded over the past two years.”
Values above the key level of 50.0 indicate optimism (expanding activity). In case the flash manufacturing PMI showed a better-than-anticipated performance, this would have a moderate bullish effect on the US dollar. The preliminary PMI reading by Markit Economics is due out at 14:45 GMT.
Correlation with other Majors
Taking into account the week ended on February 19th and the daily closing levels of the currency pairs involved, we come to the following conclusions in regard to the strength of relationship:
GBP/USD to NZD/USD (0.5425, or strong)
GBP/USD to EUR/USD (0.4638, or moderate)
GBP/USD to USD/CAD (0.3667, or moderate)
GBP/USD to USD/JPY (-0.1115, or weak)
GBP/USD to AUD/USD (-0.1837, or weak)
GBP/USD to USD/CHF (-0.5654, or strong)
1. During the examined period GBP/USD moved strongly in one and the same direction with NZD/USD, while moving strongly in the opposite direction compared to USD/CHF.
2. GBP/USD moved to a moderate extent in one and the same direction with USD/CAD and EUR/USD during the past week.
3. The correlation between GBP/USD and USD/JPY, GBP/USD and AUD/USD was insignificant during the period in question.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.4421
R2 – 1.4436
R3 (range resistance) – 1.4451
R4 (range breakout) – 1.4497
S1 – 1.4391
S2 – 1.4376
S3 (range support) – 1.4361
S4 (range breakout) – 1.4315
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4392
R1 – 1.4552
R2 – 1.4697
R3 – 1.4857
S1 – 1.4247
S2 – 1.4087
S3 – 1.3942
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