Yesterday’s trade saw GBP/USD within the range of 1.4116-1.4322. The pair closed at 1.4284, rising 0.46% on a daily basis. It has been the 22nd gain in the past 49 trading days and also a second consecutive one. The daily low has been the lowest level since March 4th, when a low of 1.4105 was registered. GBP/USD has added 2.57% to its value so far during the current month, following four consecutive months of decline.
At 7:27 GMT today GBP/USD was inching down 0.09% for the day to trade at 1.4271. The pair touched a daily low at 1.4263 during the early phase of the Asian trading session, overshooting the daily S1 level, and a daily high at 1.4290 again during early Asian trade.
On Friday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United Kingdom
Balance of Trade
The deficit on United Kingdom’s goods trade balance probably widened to GBP 10.300 billion in January, according to market expectations, from a deficit figure of GBP 9.917 billion during the preceding month. The latter has been the lowest deficit since September 2015, when a gap of GBP 9.350 billion was reported.
This indicator is also known as visible trade balance, because it reflects the difference in value between exported and imported physical goods, without the inclusion of exported and imported services. Since UK economy is to a great extent dependent on trade, the visible trade balance is considered as a key factor, providing clues over the sustainability of economic growth.
The gap on the nations total trade balance narrowed to GBP 2.709 billion in December from a revised up GBP 4.031 billion deficit posted in November. Lower prices of oil drove oil imports to their lowest level since February 2009.
In December, total exports shrank 0.8% to reach GBP 41.80 billion, as shipments of goods dropped by GBP 0.08 billion, according to the report by the Office for National Statistics (ONS). UK imports contracted 3.6% to reach GBP 44.51 billion during the same month. Purchases of goods went down by GBP 1.7 billion to reach GBP 33.0 billion in December, mostly reflecting lower imports of unspecified goods (a decrease by GBP 1.0 billion) and oil (a decrease by GBP 0.24 billion).
In case the UK trade deficit widened more than anticipated in January, this would have a moderate bearish effect on the sterling, because of negative implications regarding UK economic growth. The Office for National Statistics will publish the official trade data at 9:30 GMT.
United States
Export and Import prices
Prices of imported goods in the United States probably fell for a 9th consecutive month in February, going down at a monthly rate of 0.7%, according to market expectations. In January import prices were 1.1% lower from a month ago, driven by a 12.4% slump in fuel prices. Non-fuel prices were down 0.2% during the same month. In annual terms, prices were 6.2% lower in January, which has been the 18th consecutive month of decline, but also the smallest one since December 2014. Generally, lower import prices of goods suggest lower rates of consumer inflation.
Prices of exported goods from the United States probably decreased for a 9th consecutive month in February, falling at a monthly rate of 0.4%. In January export prices were 0.8% lower from a month ago, as agricultural export prices fell 1.1%, while prices of non-agricultural goods dropped 0.8%. In annual terms, export prices slumped 5.7% in January, or for a 17th month in a row. Lower prices of exported goods generally bolster demand abroad, and as US trade accounts for 20% of international trade relations, this also tends to be dollar positive.
The Department of Labor is expected to release the official numbers 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 – 1.4303
R2 – 1.4322
R3 (range resistance) – 1.4341
R4 (range breakout) – 1.4397
S1 – 1.4265
S2 – 1.4246
S3 (range support) – 1.4227
S4 (range breakout) – 1.4171
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
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