Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.3162-1.3274. The pair closed at 1.3179, shedding 0.42% compared to Fridays close. It has been the 165th drop in the past 306 trading days. The major pair has fallen 0.42% so far during the current month, after losing 0.59% of its value in July.
At 6:46 GMT today GBP/USD was edging up 0.29% on the day to trade at 1.3217. The pair touched a daily high at 1.3221 during the late phase of the Asian trading session, undershooting the range resistance level (R3), and a daily low at 1.3171 during late Asian trade as well.
On Tuesday GBP/USD trading may be influenced by the following macroeconomic reports and other events as listed below.
Fundamentals
United Kingdom
Construction PMI
Activity in United Kingdom’s sector of construction probably shrank for a second consecutive month in July, with the corresponding Purchasing Managers Index coming in at a reading of 43.8, according to market expectations. If so, this would be the lowest PMI level since April 2009, when the index was reported at 38.1. In June the PMI stood at 46.0, following 37 consecutive months of expansion.
The index is based on a survey, encompassing managers of companies, operating in the construction sector. They are asked about their estimate regarding current business conditions (new orders, output, employment, demand in the future). Values below the key level of 50.0 signify predominant pessimism in regard to business conditions. In case the PMI met expectations or even fell further in July, this would have a limited-to-moderate bearish effect on the Sterling. The Chartered Institute of Purchasing and Supply (CIPS) is to release the official index reading at 8:30 GMT.
United States
Feds Kaplan speech
At 10:15 GMT the Federal Reserve President for Dallas and also a FOMC member, Robert Kaplan, is expected to take a statement. Any remarks made in regard to inflation, growth, or monetary policy would certainly bolster USD volatility.
Personal Income, Personal Spending and PCE Inflation
Personal spending in the United States probably rose 0.3% in June, according to market expectations, while personal income was probably up for a 15th consecutive month in June, increasing at a monthly rate of 0.4%.
Consumer spending, which accounts for over two thirds of the nations GDP, rose 0.4% in May, following a revised up 1.1% gain in April. At the same time, personal income increased 0.2% in May, following a revised up 0.5% surge in the prior month. Disposable personal income rose 0.2%, or USD 33.9 billion, in May.
Wages and salaries were up USD 14.7 billion in May, following an increase by USD 40.4 billion in the preceding month, while supplements to wages and salaries rose USD 4.6 billion in May, after going up USD 6.0 billion in April. Private sector wages and salaries went up USD 11.8 billion in May, after a surge by USD 38.7 billion a month ago, while government wages and salaries rose USD 2.9 billion, after going up by USD 1.6 billion in April.
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.
At the same time, the Core PCE Price Index, the preferred measure of inflation by the Federal Reserve, probably rose 1.6% year-on-year in June, according to expectations, or matching the rate of increase reported in the previous three months. On a monthly basis, the Core PCE Price Index probably increased for a sixth consecutive month in June, going up 0.1%, according to analyst projections.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.183% on August 1st, or the highest level since July 26th (0.186%), after which it closed at 0.154% to add 4.2 basis points (0.042 percentage point) compared to July 29th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.695% on August 1st, after which it fell to 0.687% at the close to add 2.4 basis points (0.024 percentage point) compared to July 29th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, narrowed to 0.533% on August 1st from 0.547% on July 29th. The August 1st yield spread has been the lowest one since July 21st, when the difference was 0.513%.
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 – 1.3189
R2 – 1.3200
R3 (Range Resistance – Sell) – 1.3210
R4 (Long Breakout) – 1.3241
R5 (Breakout Target 1) – 1.3277
R6 (Breakout Target 2) – 1.3291
S1 – 1.3169
S2 – 1.3158
S3 (Range Support – Buy) – 1.3148
S4 (Short Breakout) – 1.3117
S5 (Breakout Target 1) – 1.3081
S6 (Breakout Target 2) – 1.3067
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.3198
R1 – 1.3339
R2 – 1.3444
R3 – 1.3585
R4 – 1.3726
S1 – 1.3093
S2 – 1.2952
S3 – 1.2847
S4 – 1.2742
In monthly terms, for GBP/USD we have the following pivots:
Central Pivot Point – 1.3171
R1 – 1.3546
R2 – 1.3858
R3 – 1.4233
R4 – 1.4608
S1 – 1.2859
S2 – 1.2484
S3 – 1.2172
S4 – 1.1860
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