Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.3180-1.3281. The pair closed at 1.3238, inching up 0.02% compared to Wednesdays close. It has been the 156th gain in the past 339 trading days and also a second consecutive one. The major pair has increased its advance to 0.75% so far during the current month, after losing 0.72% in August.
At 7:25 GMT today GBP/USD was edging down 0.22% on the day to trade at 1.3209. The pair touched a daily high at 1.3249 during the early phase of the Asian trading session, overshooting the daily R1 level, and a daily low at 1.3205 during early European trade.
On Friday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United States
Consumer Price Index
The annualized consumer inflation in the United States probably accelerated to 1.0% in August, according to market expectations, from 0.8% in the preceding month. The latter has been the lowest annual inflation since December 2015. In monthly terms, the Consumer Price Index (CPI) probably rose 0.1% in August, according to the market consensus, following a flat performance in the prior month.
In July, cost of food rose at an annual rate of 0.2%, slowing down from a 0.3% surge in June. It has been the lowest food inflation since March 2010. Cost of transportation services rose 3% year-on-year in July, or at the same rate as in June, while cost of shelter went up 3.3% year-on-year, decelerating from 3.5% in June, and cost of medical care soared at an annual 4.1%, accelerating from 3.8% in June, according to the report by the Bureau of Labor Statistics. On the other hand, cost of energy fell 10.9% in July compared to the same month a year earlier, following a slower (9.4%) drop in June.
The annualized core consumer inflation, which is stripped of prices of food and energy, probably remained stable at 2.2% in August, according to market expectations. In June the Core CPI rose 2.3% year-on-year.
If the general CPI tends to approach the inflation objective, set by the Federal Reserve and considered as providing price stability, or a level below but close to 2%, this would usually heighten the appeal of the US dollar, as it increases the probability of monetary policy tightening.
The Bureau of Labor Statistics is to release the official CPI report at 12:30 GMT.
Reuters/Michigan Consumer Sentiment Index – preliminary reading
The monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States improved in September. The preliminary reading of the corresponding index, which usually comes out two weeks ahead of the final data, probably reached 90.8 during the current month from a final 89.8 in August. The latter came below the preliminary reading of 90.4, which was reported on August 12th.
The sub-index of current economic conditions increased to a final reading of 107.0 in August from a preliminary value of 106.1. In July this barometer was reported at a final 109.0.
The sub-index of consumer expectations came in at a reading of 78.7, down from a preliminary value of 80.3 in August, but up from a final reading of 77.8 registered in July.
Participants in the August survey expected that the rate of inflation will be at 2.5% during the next year, or matching the rate in the preliminary release, but down from a rate of 2.7% in the July survey.
In case the gauge of consumer sentiment met or even exceeded expectations in September, this would have a moderate-to-strong bullish effect on the US Dollar. The preliminary reading is due out at 14:00 GMT.
Bond Yield Spread
The yield on UK 2-year government bonds went up as high as 0.207% on September 15th, after which it closed at 0.171% to add 0.008 percentage point compared to September 14th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.770% on September 15th, after which it fell to 0.734% at the close to lose 2.8 basis points (0.028 percentage point) compared to September 14th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, narrowed to 0.563% on September 15th from 0.599% on September 14th. The September 15th 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 – 1.3247
R2 – 1.3257
R3 (Range Resistance – Sell) – 1.3266
R4 (Long Breakout) – 1.3294
R5 (Breakout Target 1) – 1.3326
R6 (Breakout Target 2) – 1.3339
S1 – 1.3229
S2 – 1.3219
S3 (Range Support – Buy) – 1.3210
S4 (Short Breakout) – 1.3182
S5 (Breakout Target 1) – 1.3150
S6 (Breakout Target 2) – 1.3137
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.3318
R1 – 1.3397
R2 – 1.3526
R3 – 1.3605
R4 – 1.3684
S1 – 1.3189
S2 – 1.3110
S3 – 1.2981
S4 – 1.2852
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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