Forex Market: GBP/USD daily trading outlook

Yesterday’s trade saw GBP/USD within the range of 1.4171-1.4276. The pair closed at 1.4205, falling 0.42% on a daily basis. It has been the 27th drop in the past 47 trading days. GBP/USD has added 1.98% to its value so far during the current month, following four consecutive months of decline.

At 7:25 GMT today GBP/USD was edging down 0.11% for the day to trade at 1.4190. The pair touched a daily low at 1.4177 at 4:10 GMT, undershooting the range support level (S3), and a daily high at 1.4219 during the early phase of the Asian trading session.

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

Fundamentals

United Kingdom

Industrial, Manufacturing Production

Annualized industrial production in the United Kingdom probably expanded 0.1% in January, according to market expectations, following an unexpected 0.4% drop in December. The latter has been the first period of contraction in 28 months, dragged down by a sharp decline in manufacturing output. In monthly terms, industrial production probably rose 0.5% in January, according to expectations, following a 1.1% drop in December. The latter has been the sharpest monthly decrease since September 2012. Within the index, the largest decrease was observed in the gauge for mining and quarrying (down 4% month-over-month). The index of industrial output measures the change in the total inflation-adjusted value of production in sectors such as manufacturing, mining and utilities. Consistent rates of increase in industrial production suggest inflation 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 0.7% in January, according to the median forecast by analysts. If so, January would be the seventh consecutive month of contraction. In December manufacturing output fell at an annualized rate of 1.7%, or the steepest since May 2013. In monthly terms, manufacturing production probably grew 0.2% in January, according to expectations, following a 0.2% contraction in December. 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 February. During the three-month period to January the NIESR estimate pointed to a 0.4% GDP growth, or the lowest since April 2015, when a 0.4% growth rate was projected as well. The report is considered as highly reliable and usually heightens volatility of the pairs containing the pound.

Daily and Weekly Pivot Levels

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

R1 – 1.4215
R2 – 1.4225
R3 (range resistance) – 1.4234
R4 (range breakout) – 1.4263

S1 – 1.4195
S2 – 1.4186
S3 (range support) – 1.4175
S4 (range breakout) – 1.4147

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

Central Pivot Point – 1.4103
R1 – 1.4373
R2 – 1.4519
R3 – 1.4789

S1 – 1.3957
S2 – 1.3687
S3 – 1.3541