Yesterday’s trade saw GBP/USD within the range of 1.4486-1.4638. The pair closed at 1.4573, advancing 0.63% on a daily basis. It has been the 12th gain in the past 23 trading days, a third consecutive one and also the steepest one since April 19th, when the major pair went up 0.81%. The daily high has been the highest level since February 4th, when a high of 1.4670 was registered. GBP/USD has added 1.38% to its value so far during the current month, following a 3.20% surge in March.
At 6:16 GMT today GBP/USD was inching down 0.05% on the day to trade at 1.4566. The pair touched a daily high at 1.4596 during the early phase of the Asian trading session, undershooting the daily R2 level, and a daily low at 1.4554 at 6:11 GMT.
On Wednesday GBP/USD trading may be influenced by the following macroeconomic reports and other events as listed below.
Fundamentals
United Kingdom
Gross Domestic Product – preliminary estimate
The preliminary estimate of United Kingdoms GDP probably showed that economy expanded at a rate of 2.0% during the first quarter of the year compared to the same period a year ago. If so, this would be the slowest annual rate of growth since Q3 2013. The Q4 final growth rate of 2.1% was a revision up from the second GDP estimate, which pointed to a 1.9% growth.
Household consumption expenditure rose at a final rate of 2.7% in the final quarter of 2015 compared to the same period a year ago, while the second estimate pointed to a 3.1% growth. Government expenditure was 2.2% higher in Q4, according to final data, while the second estimate pointed to a 2.5% increase. Gross fixed capital formation increased at a final 2.1% in Q4, following a 2.7% surge in the second estimate. At the same time, UK exports climbed 2.2% in Q4, accelerating from a 2.1% increase, as reported previously, while the nations imports went up at a final 4.7%, slowing down from a 4.8% surge in the second estimate, the Office for National Statistics said.
On a quarterly basis, the preliminary estimate of UK GDP probably showed a 0.4% growth during Q1 2016, after in Q4 economy expanded at a rate of 0.6%, according to final data, released on March 31st. The final Q4 GDP growth rate came above the preliminary and the 2nd estimates.
In case UK growth rate came below market consensus, this would have a strong bearish effect on the sterling. The Office for National Statistics is expected to release the preliminary GDP estimate at 8:30 GMT.
United States
Pending Home Sales
The index of pending home sales in the United States probably rose 0.5% in March from a month ago, according to the median estimate by experts. In January pending home sales increased 3.5%, or the most since February 2015, when sales surged at a revised up 3.6%.
In annual terms, the index of pending home sales advanced 0.7% in February, which has been an 18th consecutive period of increase. However, Januarys rate of sales growth has been the slowest since September 2014.
In case pending home sales increased at a slower pace than anticipated, this would have a moderate bearish effect on the US dollar. The National Association of Realtor’s (NAR) will report on the official index performance at 14:00 GMT.
FOMC policy decision
The Federal Open Market Committee (FOMC) will probably keep the target range for the federal funds rate intact between 0.25% and 0.50% at its two-day policy meeting, scheduled to be concluded today, according to the median forecast by experts.
In December 2015 the Committee raised borrowing costs by 25 basis points to the current 0.500% level for the first time in 55 policy meetings.
In March the target range was left intact. Policy makers stressed on the moderate-paced expansion in economic activity, but, however, estimates of US growth and PCE inflation were revised down. Economy is now projected to expand 2.2% in 2016 (down from 2.4% as expected in December), 2.1% in 2017 (down from 2.2% as expected in December) and 2.0% in 2018 (unchanged from Decembers estimate). The Personal Consumption Expenditure Price Index is now projected to rise 1.2% in 2016 (down from a 1.6% surge as expected in December), 1.9% in 2017 (unchanged from December) and 2.0% in 2018 (also unchanged from Decembers estimate).
According to the FOMCs Policy Statement released in March: ”The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen. However, global economic and financial developments continue to pose risks. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further”.
The Minutes from the FOMCs meeting on March 15th-16th reiterated concerns over risks coming from global economic and financial developments.
The official rate decision is scheduled at 18:00 GMT.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.4587
R2 – 1.4601
R3 (range resistance) – 1.4615
R4 (range breakout) – 1.4657
S1 – 1.4559
S2 – 1.4545
S3 (range support) – 1.4531
S4 (range breakout) – 1.4489
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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