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Forex Market: GBP/USD trading outlook for September 9th 2016

Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.3283-1.3377. The pair closed at 1.3296, edging down 0.34% compared to Wednesdays close. It has been the 181st drop in the past 334 trading days and also a second consecutive one. The daily low has been a level unseen since September 2nd, when a low of 1.3253 was registered. The major pair has pared its advance to 1.19% so far during the current month, after losing 0.72% in August.

At 7:28 GMT today GBP/USD was inching up 0.07% on the day to trade at 1.3305. The pair touched a daily high at 1.3338 during the mid phase of the Asian trading session, undershooting the upper range breakout level, and a daily low at 1.3292 during early Asian trade.

On Friday GBP/USD trading may be influenced by the following macroeconomic reports and other events as listed below.


United Kingdom

Balance of Trade

The deficit on United Kingdom’s visible trade balance (goods only) probably narrowed to GBP 11.75 billion in July, according to market expectations, from GBP 12.41 billion in June. The latter has been the largest gap on trade in goods in at least 20 years.

The deficit on United Kingdom’s total trade balance widened to GBP 5.084 billion in June from a revised up shortfall of GBP 4.227 billion in May, as imports rose at a faster rate than exports to a record-high level.

During the month, total exports rose 2.4% to reach GBP 43.8 billion. June’s performance was mostly influenced by a 4% surge in shipments of goods, while exports of services were 0.3% higher. Exports of oil expanded by GBP 0.4 billion in June, while those of chemicals went up GBP 0.2 billion.

Total imports expanded 4% to reach GBP 48.9 billion during the same period, supported by imports of goods. Purchases of oil rose GBP 0.7 billion in May, while those of chemicals, aircraft and material manufactures – by GBP 0.4 billion each.

In case the UK visible trade deficit narrowed more than anticipated in July, this would have a moderate bullish effect on the Sterling, because of positive implications regarding the nation’s economic growth. The Office for National Statistics (ONS) will release the official trade data at 8:30 GMT.

United States

Fed Speakers

At 11:45 GMT the Fed President for Boston and a FOMC member, Eric Rosengren, is expected to take a statement, followed by the Fed President for Dallas and also a member of the Committee, Robert Kaplan, at 13:30 GMT. Any remarks made in regard to the Bank’s monetary policy stance or the US economic outlook would certainly boost USD volatility.

Wholesale Inventories

The value of goods inventories, held at US wholesalers, probably rose at a monthly rate of 0.1% in July, according to market expectations. If so, this would be the fifth consecutive month of expansion. In June inventories went up by another 0.3%. In case wholesale inventories grew at a faster rate than projected in July, this would have a limited-to-moderate bearish effect on the US Dollar. The Census Bureau is to release the official report at 14:00 GMT.

Bond Yield Spread

The yield on UK 2-year government bonds went as high as 0.169% on September 8th, or the highest level since September 1st (0.177%), after which it closed at 0.168% to add 6.6 basis points (0.066 percentage point) compared to September 7th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.782% on September 8th, after which it fell to 0.774% at the close to add 3.6 basis points (0.036 percentage point) compared to September 7th.

The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, narrowed to 0.606% on September 8th from 0.636% on September 7th. The September 8th yield spread has been the lowest one since August 19th, when the difference was 0.591%.

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 – 1.3305
R2 – 1.3313
R3 (Range Resistance – Sell) – 1.3322
R4 (Long Breakout) – 1.3348
R5 (Breakout Target 1) – 1.3378
R6 (Breakout Target 2) – 1.3390

S1 – 1.3287
S2 – 1.3279
S3 (Range Support – Buy) – 1.3270
S4 (Short Breakout) – 1.3244
S5 (Breakout Target 1) – 1.3214
S6 (Breakout Target 2) – 1.3202

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

Central Pivot Point – 1.3236
R1 – 1.3412
R2 – 1.3531
R3 – 1.3707
R4 – 1.3883

S1 – 1.3117
S2 – 1.2941
S3 – 1.2822
S4 – 1.2703

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

Central Pivot Point – 1.3126
R1 – 1.3387
R2 – 1.3634
R3 – 1.3895
R4 – 1.4155

S1 – 1.2879
S2 – 1.2618
S3 – 1.2371
S4 – 1.2123

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