Forex Market: GBP/USD trading outlook for August 11th 2016

Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.2991-1.3096. The pair closed at 1.3011, inching up 0.07% compared to Tuesdays close. It has been the 143rd gain in the past 313 trading days. The daily high has been an almost exact test of the high from August 8th. The major pair has pared its decline to 1.67% so far during the current month, after losing 0.59% of its value in July.

At 6:34 GMT today GBP/USD was inching down 0.02% on the day to trade at 1.3009. The pair touched a daily high at 1.3030 during the early phase of the Asian trading session, making an exact test of the daily R2 level, and a daily low at 1.2994 during late Asian trade.

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

Fundamentals

United States

Initial, Continuing Jobless Claims

The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on August 5th, probably fell to 265 000, according to market consensus, from 269 000 in the preceding week.

The 4-week moving average, an indicator lacking seasonal effects, was 260 250, marking an increase by 3 750 compared to the preceding weeks unrevised average.

The business week, which ended on July 29th, has been the 74th consecutive week, when jobless claims stood below the 300 000 threshold, which suggested a healthy labor market. It has been the longest streak in 43 years.

Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or decreased further, this would have a moderate bullish effect on the US dollar.

The number of continuing jobless claims probably rose to the seasonally adjusted 2 140 000 during the business week ended on July 29th, according to the median forecast by experts, from 2 138 000 in the preceding week. The latter represented a drop by 6 000 compared to the revised up number of claims reported in the week ended on July 15th. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.

The US Department of Labor is to release the weekly report at 12:30 GMT.

Bond Yield Spread

The yield on UK 2-year government bonds went as high as 0.151% on August 10th, or an exact test of the high from August 8th, after which it closed at 0.094% to lose 1.4 basis points (0.014 percentage point) compared to August 9th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.714% on August 10th, after which it fell to 0.690% at the close to lose 2.4 basis points (0.024 percentage point) compared to August 9th.

The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, narrowed to 0.596% on August 10th from 0.606% on August 9th. The August 10th yield spread has been the lowest one since August 5th, when the difference was 0.573%.

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 – 1.3021
R2 – 1.3030
R3 (Range Resistance – Sell) – 1.3040
R4 (Long Breakout) – 1.3069
R5 (Breakout Target 1) – 1.3102
R6 (Breakout Target 2) – 1.3116

S1 – 1.3001
S2 – 1.2992
S3 (Range Support – Buy) – 1.2982
S4 (Short Breakout) – 1.2953
S5 (Breakout Target 1) – 1.2920
S6 (Breakout Target 2) – 1.2906

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

Central Pivot Point – 1.3155
R1 – 1.3289
R2 – 1.3507
R3 – 1.3641
R4 – 1.3774

S1 – 1.2937
S2 – 1.2803
S3 – 1.2585
S4 – 1.2366

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