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Forex Market: GBP/USD daily trading outlook

Yesterday’s trade saw GBP/USD within the range of 1.3220-1.3418. The pair closed at 1.3346, rising 0.96% compared to Mondays close. It has been the 129th gain in the past 282 trading days. On Monday the major pair hit lows unseen since July 1985, falling to as low as 1.3118. The cross has fallen 8.09% so far in June, following a 0.92% drop in the prior month.

At 6:40 GMT today GBP/USD was inching up 0.07% on the day to trade at 1.3355. The pair touched a daily high at 1.3371 during the early phase of the Asian trading session, undershooting the daily R2 level, and a daily low at 1.3289 during early Asian trade as well.

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


United Kingdom

Consumer Lending, Mortgage Approvals

Lending to consumers in the United Kingdom probably decreased to GBP 1.400 billion in May from GBP 1.287 billion in April. The latter has been the lowest amount borrowed since December 2015, when a revised down figure of GBP 1.148 billion was reported. Credit card lending rose GBP 0.3 billion in April, while the average monthly increase in the preceding six months was GBP 0.4 billion. Other loans expanded GBP 0.9 billion in April, compared to an average increase of GBP 1.0 billion in the prior six months.

This indicator reflects borrowing by the UK personal sector (individuals only) to fund current expenditures on goods and services, which are a driving force behind economic growth.

At the same time, the number of mortgage approvals in the United Kingdom probably decreased to 65 250 in May, according to experts’ expectations, from 66 250 in April. The latter has been the lowest figure since May 2015, when a revised up number of 64 830 mortgages approved was reported (64 430 previously). Mortgage approvals are considered as a leading indicator, reflecting the health of the country’s housing market. In case the number of mortgages approved fell more than anticipated, this would imply potentially lower demand in the nations housing sector and, respectively, a somewhat negative impulse for overall economy. Therefore, it would have a limited-to-moderate bearish effect on the Sterling. Bank of England will release the official numbers at 8:30 GMT.

United States

Personal Income, Personal Spending

Personal spending in the United States probably rose 0.4% in May, according to market expectations, while personal income was probably up for a 14th consecutive month in May, increasing at a monthly rate of 0.3%.

Consumer spending, which accounts for over two thirds of the nations GDP, rose 1.0% in April, or at the fastest monthly rate since August 2009. At the same time, personal income increased 0.4% in April, or matching the gain rate in March, which implied a robust recovery.

Wages and salaries were up USD 38.6 billion in April, following an increase by USD 30.7 billion in the preceding month, while supplements to wages and salaries rose USD 5.9 billion in April, after going up USD 5.5 billion in March. Private sector wages and salaries went up USD 37.2 billion in April, after an increase by USD 27.6 billion a month ago, while government wages and salaries rose USD 1.4 billion, after going up by USD 3.1 billion in March.

Higher-than-expected rates of increase imply good employment conditions and, therefore, are dollar positive. The Bureau of Economic Analysis is to publish the official figures at 12:30 GMT.

Pending Home Sales

The index of pending home sales in the United States probably fell 1.1% in May from a month ago, according to the median estimate by experts. In April pending home sales increased 5.1%, or the most since May 2014, when sales surged at a revised down monthly rate of 6.0%.

In annual terms, the index of pending home sales advanced 4.6% in April, which has been a 20th consecutive period of increase. In addition, Aprils rate of sales growth has been the fastest since August 2015.

In case pending home sales decreased at a faster pace than anticipated in May, 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.

Bond Yield Spread

The yield on UK 2-year government bonds went as high as 0.218% on June 28th, after which it closed at 0.181% to add 2.9 basis points (0.029 percentage point) compared to June 27th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.633% on June 28th, or the highest level since June 24th (0.755%), after which it fell to 0.617% at the close to add 2 basis points (0.02 percentage point) compared to June 27th.

The spread between 2-year UK and 2-year US bond yields, which reflects the flow of funds in a short term, shrank to 0.436% on June 28th from 0.445% on June 27th. The June 28th yield spread has been the lowest one since June 24th, when the difference was 0.362%.

Daily, Weekly and Monthly Pivot Levels

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

R1 – 1.3364
R2 – 1.3382
R3 (range resistance) – 1.3400
R4 (range breakout) – 1.3455

S1 – 1.3328
S2 – 1.3310
S3 (range support) – 1.3292
S4 (range breakout) – 1.3237

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

Central Pivot Point – 1.3977
R1 – 1.4724
R2 – 1.5764
R3 – 1.6511

S1 – 1.2937
S2 – 1.2190
S3 – 1.1150

In monthly terms, for GBP/USD we have the following pivots:

Central Pivot Point – 1.4526
R1 – 1.4722
R2 – 1.4966
R3 – 1.5162

S1 – 1.4282
S2 – 1.4086
S3 – 1.3842

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