Friday’s trade saw GBP/USD within the range of 1.4338-1.4458. The pair closed at 1.4362, retreating 0.61% on a daily basis. It has been the 18th drop in the past 36 trading days and also the sharpest one since May 3rd, when the pair fell 0.95%. The daily low has been the lowest level since April 22nd, when a low of 1.4310 was registered. In weekly terms, GBP/USD lost 0.47% of its value during the past week. It has been the 9th drop in the past 19 weeks and also a second consecutive one. The major pair has extended its slump to 1.70% so far during the current month, following two consecutive months of advance.
At 6:46 GMT today GBP/USD was edging up 0.13% on the day to trade at 1.4369. The pair touched a daily high at 1.4373 at 6:47 GMT, marking an exact test of the daily R1 level, and a daily low at 1.4346 during the early phase of the Asian trading session.
On Monday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
New York Empire State Manufacturing Index
The New York Empire State Manufacturing Index probably slipped to a value of 7.00 in May, according to the median forecast by experts, from 9.56 in April. The latter has been the highest index reading since January 2015, when the gauge was reported at 9.95.
In April, the gauge of new orders rose to 11.14 from 9.57 in the preceding month, that of shipments went down to 11.14 from 13.88. The gauge of prices paid accelerated, that of prices received rebounded, while employment levels remained little changed. The six-month outlook continued to improve during the period, as future business conditions index surged for a third consecutive month, reaching a level of 29.4 (25.5 in March).
Readings above 0.00 are indicative of improving business conditions in the region. Lower-than-anticipated index values will usually have a moderate bearish effect on the US dollar. The Federal Reserve Bank of New York is expected to release the official reading at 12:30 GMT.
NAHB Housing Market Index
The National Association of Home Builders (NAHB) Housing Market Index probably rose to 59.0 in May, according to market expectations, from 58.0 in April. If so, this would be the 23rd consecutive month, when the gauge stood in the area above 50.0 and would also be the highest reading since January.
“Builder confidence has held firm at 58 for three consecutive months, showing that the single-family housing sector continues to recover at a slow but consistent pace,” NAHB chairman, Ed Brady, said in a reference to index performance in April, cited by Business Insider. “As we enter the spring home buying season, we should see the market move forward.”
The indicator is based on a monthly survey in regard to current home sales and expected sales in the coming six months. Values above the key level of 50.0 indicate that housing market conditions are good. Therefore, higher-than-projected readings would provide a moderate support to the US dollar. The official report is scheduled for release at 14:00 GMT.
Correlation with other Majors
Taking into account the business week ended on May 13th 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 AUD/USD (0.8609, or very strong)
GBP/USD to EUR/USD (0.7735, or strong)
GBP/USD to NZD/USD (0.4794, or moderate)
GBP/USD to USD/JPY (0.3996, or moderate)
GBP/USD to USD/CHF (-0.4762, or moderate)
GBP/USD to USD/CAD (-0.8129, or very strong)
1. During the examined period GBP/USD moved almost equally in one and the same direction with AUD/USD.
2. GBP/USD moved almost equally in the opposite direction compared to USD/CAD during the past week.
3. GBP/USD moved strongly in one and the same direction with EUR/USD during the period in question.
4. GBP/USD moved to a moderate extent in one and the same direction with USD/JPY and NZD/USD last week, while moving to a moderate extent in the opposite direction compared to USD/CHF.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.4373
R2 – 1.4384
R3 (range resistance) – 1.4395
R4 (range breakout) – 1.4428
S1 – 1.4351
S2 – 1.4340
S3 (range support) – 1.4329
S4 (range breakout) – 1.4296
By using the traditional method of calculation again, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4410
R1 – 1.4482
R2 – 1.4602
R3 – 1.4674
S1 – 1.4290
S2 – 1.4218
S3 – 1.4098