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Forex Market: GBP/USD daily trading outlook

Friday’s trade saw GBP/USD within the range of 1.4310-1.4451. The pair closed at 1.4403, advancing 0.56% on a daily basis. It has been the 10th gain in the past 21 trading days. The daily high has been the highest level since March 30th, when a high of 1.4460 was registered. In weekly terms, GBP/USD appreciated 1.47% during the past week. It has been the 9th gain in the past 16 weeks, a second consecutive one and also the steepest one since the week ended on March 6th, when the major pair rose 2.57%. GBP/USD has added 0.59% to its value so far during the current month, following a 3.20% surge in March. The latter has been the steepest monthly advance since September 2013, when the pair went up 4.36%.

At 6:46 GMT today GBP/USD was inching down 0.03% on the day to trade at 1.4440. The pair touched a daily high at 1.4470 during the early phase of the Asian trading session, undershooting the upper range breakout level (R4), and a daily low at 1.4422 during late Asian trade.

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


United Kingdom

CBI Industrial Orders

At 10:00 GMT the Confederation of British Industry (CBI) will announce the results from its April survey, encompassing 17 major industries. The gauge of industrial orders in the UK stood in negative territory for an 11th consecutive period during the three months to March, as it came in at a reading of -14, improving from -17 in the three months to February.

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 countrys 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 12th consecutive period, this would have a limited bearish effect on the sterling.

United States

New Home Sales

Sales of new single-family homes probably rose 1.5% to the seasonally adjusted annual rate of 527 000 in March, according to market expectations, from 512 000 reported in February. Sales in the West went up 38.5% in February, rebounding from a 32.7% slump in the previous month. On the other hand, sales in the South were 4.1% lower, after a 4.6% surge in January, sales in the Midwest decreased 17.9% during the period and those in the Northeast plummeted 24.2%.

The median sales price of new houses sold went down as low as USD 301 400 in February, after being at USD 283 900 in the preceding month. The average sales price went down to USD 348 900 in February from USD 363 400 in January. At the end of the month, the seasonally adjusted estimate of new houses for sale was 240 000, up from 236 000 at the end of January. It represents a supply of 5.6 months at the current sales rate, according to the report by the US Census Bureau.

In case the index showed a better-than-anticipated performance, this would have a strong bullish effect on the US dollar. The Census Bureau is to report the official figure at 14:00 GMT.

Correlation with other Majors

Taking into account the business week ended on April 22nd and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:

GBP/USD to USD/JPY (0.6638, or strong)
GBP/USD to USD/CHF (0.2524, or weak)
GBP/USD to AUD/USD (0.0381, or very weak)
GBP/USD to NZD/USD (-0.0466, or very weak)
GBP/USD to EUR/USD (-0.2325, or weak)
GBP/USD to USD/CAD (-0.7586, or strong)

1. During the examined period GBP/USD moved strongly in one and the same direction with USD/JPY, while moving strongly in the opposite direction compared to USD/CAD.

2. GBP/USD moved almost independently compared to AUD/USD and NZD/USD during the past week.

3. The correlation between GBP/USD and USD/CHF, GBP/USD and EUR/USD was insignificant.

Daily and Weekly Pivot Levels

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

R1 – 1.4416
R2 – 1.4429
R3 (range resistance) – 1.4442
R4 (range breakout) – 1.4481

S1 – 1.4390
S2 – 1.4377
S3 (range support) – 1.4364
S4 (range breakout) – 1.4325

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

Central Pivot Point – 1.4328
R1 – 1.4526
R2 – 1.4650
R3 – 1.4848

S1 – 1.4204
S2 – 1.4006
S3 – 1.3882

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