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Forex Market: GBP/USD daily trading outlook

Yesterday’s trade saw GBP/USD within the range of 1.4080-1.4228. The pair closed at 1.4114, losing 0.66% on a daily basis. It has been the 32nd drop in the past 58 trading days and also a third consecutive one. The daily low has been the lowest level since March 16th, when a low of 1.4051 was registered. GBP/USD has trimmed its advance to 1.20% so far during the current month.

At 7:12 GMT today GBP/USD was edging down 0.22% for the day to trade at 1.4083. The pair touched a daily low at 1.4080 at 7:11 GMT, undershooting the range support level (S3), and a daily high at 1.4120 during the early phase of the Asian trading session.

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

Fundamentals

United Kingdom

Retail Sales

Annualized retail sales in the United Kingdom probably rose at a rate of 3.5% in February, according to the median forecast by experts, after in January sales increased by another 5.2%. The latter has been the steepest annual rate of increase since September 2015, when the index rose at a revised down 6.2% (6.5% previously). If expectations were met, February would be the 35th consecutive month of sales growth.

In monthly terms, retail sales probably decreased 1.0% in February, according to market expectations. In January retail sales went up 2.3%, or at the fastest monthly rate since December 2013, when the indicator rose at a revised up 2.6%. Januarys surge came as a result of higher sales at food stores (+1.1%), non-food stores (+3.6%), textiles, clothing and footwear stores (+3.3%), other stores (+8.1%) and auto fuel stations (+2.5%).

Annualized retail sales, without taking into account fuel sales, probably surged 3.3% in February, following a 5.0% increase in January. If expectations were met, February would be the 46th 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.

BBA Home Loans

At the same hour the British Bankers’ Association (BBA) is to release the monthly data regarding home lending in February. In January the BBA issued 47 509 home loans in the UK, or the most since February 2014, when 47 600 loans were reported. The BBA features the major banks in the country, which account for almost 60% of overall mortgage lending. The number of mortgage loans is considered as a leading indicator in regard to UK housing market conditions. As growth in mortgage lending signifies a healthy housing sector, which also contributes to overall economic activity, in case the number of loans rose in February from a month ago, this would have a moderate bullish effect on the sterling.

United States

Initial, Continuing Jobless Claims

The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on March 18th, probably rose to 268 000, according to market expectations, from 265 000 reported in the preceding week.

The 4-week moving average, an indicator lacking seasonal effects, was 268 000, marking an increase by 750 compared to the preceding weeks revised down average.

The business week, which ended on March 11th has been the 54th consecutive week, when jobless claims stood below the 300 000 threshold, which suggested a healthy labor market. This has been the longest streak since 1973.

Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or increased further, this would have a moderate bearish effect on the US dollar.

The number of continuing jobless claims probably fell to the seasonally adjusted 2 230 000 during the business week ended on March 11th from 2 235 000 in the preceding week. The latter represented an increase by 8 000 compared to the revised up number of claims reported in the week ended on February 26th. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.

The Department of Labor is to release the weekly report at 12:30 GMT.

Durable Goods Orders

The value of durable goods orders in the United States probably decreased 2.3% in February from a month ago, according to the median forecast by experts, following a revised down 4.7% surge in January. The latter has been the strongest monthly gain since July 2014, when orders value was reported to have increased 22.6%.

The value of shipments of manufactured durable goods, up in two of the past three months, rose 1.9% (or USD 4.6 billion) in January to reach USD 241.9 billion. The value of unfilled orders for manufactured durable goods, up in three of the past four months, rose 0.1% (or USD 0.6 billion) in January to reach USD 1,187.7 billion. At the same time, the value of inventories of manufactured durable goods, down in six of the past seven months, fell 0.1% (or USD 0.4 billion) during the period to USD 396.3 billion, according to data by the US Census Bureau.

Non-defense new orders for capital goods soared 21.6% (or USD 14.0 billion) in January to USD 79.2 billion, while defense new orders for capital goods went up 11.9% (or USD 1.1 billion) during the month to USD 10.2 billion.

The value of durable goods orders, excluding transportation, probably decreased 0.2% in February from a month ago, according to expectations, following a revised down 1.7% surge in January. The latter has been the largest monthly increase since June 2014, when core orders were up at a revised down 1.9%. Large ticket orders, such as automobiles for civil use or aircraft, are not present in the calculation, as their value may be in a wide range. This way the index provides a more reliable information in regard to orders for durable goods.

In case the general index dropped at a faster-than-projected pace, this would have a strong bearish effect on the US dollar, due to negative implications in regard to the wider gauge of production, factory orders. The US Census Bureau is scheduled to release the official report at 12:30 GMT.

Daily and Weekly Pivot Levels

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

R1 – 1.4128
R2 – 1.4141
R3 (range resistance) – 1.4155
R4 (range breakout) – 1.4195

S1 – 1.4100
S2 – 1.4087
S3 (range support) – 1.4073
S4 (range breakout) – 1.4033

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

Central Pivot Point – 1.4350
R1 – 1.4648
R2 – 1.4816
R3 – 1.5114

S1 – 1.4182
S2 – 1.3884
S3 – 1.3716

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