Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.2973-1.3296. The pair closed at 1.3270, surging 2.12% compared to Mondays close. It has been the 134th gain in the past 292 trading days, a third consecutive one and also the steepest one since June 20th, when it advanced 2.37%. The daily high has been an exact test of the high from July 5th. The major pair has pared its slump to 0.16% so far during the current month, after depreciating 8.06% in June.
At 7:03 GMT today GBP/USD was inching up 0.02% on the day to trade at 1.3272. The pair touched a daily high at 1.3337 during the early phase of the Asian trading session, overshooting the daily R2 level, and a daily low at 1.3225 during early Asian trade as well.
On Wednesday GBP/USD trading may be influenced by the following macroeconomic reports and other events as listed below.
Fundamentals
United States
Fed speakers
Markets will be paying attention to the statements by several Fed officials. At 10:00 GMT the Fed President for Philadelphia, Patrick Harker, is expected to speak, followed by the Fed President for Dallas, Robert Kaplan, at 13:00 GMT. Any remarks regarding the US economic outlook or the Banks monetary policy stance would certainly boost USD volatility.
Import and Export prices
Prices of imported goods in the United States probably rose for a fourth consecutive month in June, going up at a monthly rate of 0.5%, according to market expectations. In May import prices were 1.4% higher from a month ago, or marking their steepest rate of increase since March 2012, as imported fuel prices surged 16.2%, while non-fuel prices (consumer goods, foods and beverages, feeds, capital goods) rose 0.3%. In annual terms, import prices were 5.0% lower in May, which has been the 22nd consecutive month of decline. Generally, higher import prices of goods suggest higher rates of consumer inflation.
Prices of exported goods from the United States probably increased for a third straight month in June, going up at a monthly pace of 0.3%, according to market expectations. In May export prices rose 1.1% from a month ago, or marking their largest rate of increase since March 2011, as agricultural export prices surged 2.9%, supported by prices of soybeans, corn, meat and nuts. At the same time, non-agricultural export prices soared 1.0%, driven by higher prices of industrial supplies and materials, capital and consumer goods. In annual terms, export prices slumped 4.5% in May, or for a 21st month in a row. Lower prices of exported goods generally bolster demand abroad, and as US trade accounts for 20% of international trade relations, this also tends to be dollar positive.
The Department of Labor is expected to release the official numbers at 12:30 GMT.
Beige Book
At 18:00 GMT the Federal Reserve is to release its ”Beige Book” report. It is published eight times during the year. Each of the banks in the 12 Federal Reserve Districts gathers data in regard to current economic situation in the country on the basis of interviews with key business contacts, economists, market experts, and other sources. In case the Beige Book presents an optimistic economic outlook, this will usually support the US Dollar, while a pessimistic view will have a bearish effect on the currency.
Theresa May to be appointed as the new PM
Theresa May is expected to be announced as the new Prime Minister by Wednesday evening. It still remains uncertain when she will trigger Article 50, which marks the beginning of the withdrawal process from the European Union.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.201% on July 12th, or the highest level since June 30th, after which it closed at 0.191% to add 3.2 basis points (0.032 percentage point) compared to July 11th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.697% on July 12th, or the highest level since June 24th (0.755%), after which it fell to 0.693% at the close to add 3.6 basis points (0.036 percentage point) compared to July 11th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, widened to 0.502% on July 12th from 0.498% on July 11th. The July 12th yield spread has been the highest one since June 2nd, when the difference was 0.503%.
Daily, Weekly and Monthly Pivot Levels
By employing the Camarilla calculation method, the daily levels of importance for GBP/USD are presented as follows:
R1 – 1.3300
R2 – 1.3329
R3 (Range Resistance – Sell) – 1.3359
R4 (Long Breakout) – 1.3448
R5 (Breakout Target 1) – 1.3551
R6 (Breakout Target 2) – 1.3600
S1 – 1.3240
S2 – 1.3211
S3 (Range Support – Buy) – 1.3181
S4 (Short Breakout) – 1.3092
S5 (Breakout Target 1) – 1.2989
S6 (Breakout Target 2) – 1.2940
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.3031
R1 – 1.3266
R2 – 1.3576
R3 – 1.3811
R4 – 1.4046
S1 – 1.2721
S2 – 1.2486
S3 – 1.2176
S4 – 1.1866
In monthly terms, for GBP/USD we have the following pivots:
Central Pivot Point – 1.3817
R1 – 1.4517
R2 – 1.5722
R3 – 1.6422
R4 – 1.7121
S1 – 1.2612
S2 – 1.1912
S3 – 1.0707
S4 – 0.9501
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