Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.2978-1.3088. The pair closed at 1.3042, inching down 0.03% compared to Tuesdays close. It has been the 174th drop in the past 318 trading days. The daily high has been a level unseen since August 10th, when a high of 1.3096 was registered. The major pair has increased its decline to 1.45% so far during the current month, after losing 0.59% of its value in July.
At 6:40 GMT today GBP/USD was edging up 0.18% on the day to trade at 1.3066. The pair touched a daily high at 1.3090 during the early phase of the Asian trading session, undershooting the upper range breakout level (R4), and a daily low at 1.3036 during early Asian trade as well.
On Thursday GBP/USD trading may be influenced by the following macroeconomic reports and other events as listed below.
Fundamentals
United Kingdom
Retail Sales
Annualized retail sales in the United Kingdom probably rose at a rate of 4.2% in July, according to the median forecast by experts, after in June sales increased by another 4.3%. If expectations were met, July would be the 40th consecutive month of sales growth.
In monthly terms, retail sales probably went up 0.2% in July, according to market expectations. In June retail sales shrank 0.9%, or at the fastest monthly rate since December 2015, when the indicator fell at a revised up 1.4%. In June, sales of textiles, clothing and footwear marked the largest drop (down 1.8%), followed by sales at non-specialized stores (down 1.6%), food sales (down 1.2%), non-food sales (down 0.8%) and auto fuel sales (down 0.4%).
Annualized retail sales, without taking into account fuel sales, probably surged 3.9% in July, or at the same rate as reported in June. If expectations were met, July would be the 51st consecutive month of growth in annual core sales.
Retail sales represent a short-term indicator, which provides key information about consumption on a national scale. Higher retail sales suggest stronger consumer demand, confidence and economic growth, respectively. Therefore, in case the general index of retail sales increased at a faster-than-expected rate, this would have a strong bullish effect on the Sterling. The Office for National Statistics is expected to publish the official report at 8:30 GMT.
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 12th, probably fell to 265 000, according to market consensus, from 266 000 in the preceding week.
The 4-week moving average, an indicator lacking seasonal effects, was 262 750, marking an increase by 3 000 compared to the preceding week’s revised down average.
The business week, which ended on August 5th, has been the 75th consecutive week, when jobless claims stood below the 300 000 threshold, which suggested a healthy labor market. It has been the longest streak since 1970.
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 fell to the seasonally adjusted 2 140 000 during the business week ended on August 5th, according to the median forecast by experts, from 2 155 000 in the preceding week. The latter represented an increase by 14 000 compared to the revised up number of claims reported in the week ended on July 22nd. 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.
Philadelphia Fed Manufacturing Index
The Philadelphia Fed Manufacturing Index probably improved to a reading of 2.0 in August, according to the median forecast by experts, after unexpectedly falling to a level of -2.9 in July. The latter has been the lowest index reading since January, when the gauge was reported at -3.5. In July, the gauge for inventories (-4.3 after being at -9.9 in June) and employment (-1.6 after being at -10.9 in June) improved, while the sub-index for new orders (11.8 after being at -3 in the prior month) and shipments (6.3 after being at -2.1 in June) came into positive territory.
A level above zero is indicative of improving business conditions, while a level below zero is indicative of worsening conditions. In case the index rose more than projected in August, this would have a moderate bullish effect on the US dollar. The Federal Reserve Bank of Philadelphia is expected to release the official results from the survey at 12:30 GMT.
Fed Speakers
At 14:05 GMT the Fed President for New York and a FOMC member, William Dudley, is expected to take a statement, followed by the Fed President for San Francisco and also a member to the Committee, John Williams, at 20:00 GMT. Any remarks made in regard to the US economic outlook or the Bank’s policy stance would heighten USD volatility.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.192% on August 17th, after which it closed at 0.178% to add 0.004 percentage point compared to August 16th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.774% on August 17th, or the highest level since July 27th (0.778%), after which it fell to 0.722% at the close to lose 2.8 basis points (0.028 percentage point) compared to August 16th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, narrowed to 0.544% on August 17th from 0.576% on August 16th. The August 17th yield spread has been the lowest one since August 4th, when the difference was 0.535%.
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 – 1.3052
R2 – 1.3062
R3 (Range Resistance – Sell) – 1.3072
R4 (Long Breakout) – 1.3103
R5 (Breakout Target 1) – 1.3138
R6 (Breakout Target 2) – 1.3153
S1 – 1.3032
S2 – 1.3022
S3 (Range Support – Buy) – 1.3012
S4 (Short Breakout) – 1.2982
S5 (Breakout Target 1) – 1.2946
S6 (Breakout Target 2) – 1.2931
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.2972
R1 – 1.3041
R2 – 1.3167
R3 – 1.3236
R4 – 1.3305
S1 – 1.2846
S2 – 1.2777
S3 – 1.2651
S4 – 1.2525
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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