Forex Market: GBP/USD trading outlook for September 28th 2016


Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.2936-1.3027. The pair closed at 1.3023, edging up 0.37% compared to Mondays close. It has been the 161st gain in the past 347 trading days and also a second consecutive one. The major pair has trimmed its drop to 0.88% so far during the current month, after losing 0.72% in August.

At 7:08 GMT today GBP/USD was inching down 0.05% on the day to trade at 1.3017. The pair touched a daily high at 1.3029 during the early phase of the European trading session, undershooting the daily R1 level, and a daily low at 1.2992 during early Asian trade.

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


United States

Fed Speakers

At 12:45 GMT Federal Open Market Committee member, Neel Kashkari, is expected to take a statement, followed by James Bullard at 14:15 GMT, Charles Evans at 17:30 GMT, Loretta Mester at 20:35 GMT and Esther George at 23:15 GMT. Any hints in regard to the Bank’s policy stance or US economic outlook would certainly heighten USD volatility.

Meanwhile, at 14:00 GMT Fed Chair, Janet Yellen, is to give semi-annual testimony on Federal Reserve supervision and regulation of the financial system in front of the House Financial Services Committee.

Durable Goods Orders

The value of durable goods orders in the United States probably shrank 1.4% in August from a month ago, according to the median forecast by experts. In July, orders rose at a monthly rate of 4.4%, recovering after two consecutive months of decline. It has been the steepest monthly increase since October 2015.

The value of shipments of manufactured durable goods, up in three out of the past four months, rose 0.2% (or USD 0.4 billion) to reach USD 232.9 billion in July. The value of unfilled orders for manufactured durable goods, down for a second consecutive month, fell 0.1% (or USD 0.8 billion) to reach USD 1,126.6 billion in July. At the same time, the value of inventories of manufactured durable goods, up after six straight months of decline, went up 0.3% (or USD 1.2 billion) during the period to USD 383.0 billion, according to data by the US Census Bureau.

Non-defense new orders for capital goods climbed 10.2% (or USD 6.6 billion) to USD 71.6 billion in July, while defense new orders for capital goods surged 35.7% (or USD 2.5 billion) during the month to USD 9.6 billion.

The value of durable goods orders, excluding transportation, probably shrank 0.4% in August from a month ago, according to expectations, following a revised down 1.3% surge in July. The latter has been the fastest monthly rate of increase since March 2014, when core orders went up at a revised up 2.9% (2.4% previously) pace.

In case the general index dropped at a faster-than-projected rate in August, this would have a strong bearish effect on the US dollar, due to negative implications in regard to the wider gauge of production, factory orders. The US Census Bureau is scheduled to release the official report at 12:30 GMT.

Bond Yield Spread

The yield on UK 2-year government bonds went up as high as 0.107% on September 27th, after which it closed at 0.088% to add 0.008 percentage point compared to September 26th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.770% on September 27th, or the highest level since September 23rd (0.787%), after which it fell to 0.750% at the close to add 1.2 basis points (0.012 percentage point) compared to September 26th.

The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, widened to 0.662% on September 27th from 0.658% on September 26th. The September 27th yield spread has been the largest one since September 22nd, when the difference was 0.693%.

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 – 1.3031
R2 – 1.3040
R3 (Range Resistance – Sell) – 1.3048
R4 (Long Breakout) – 1.3073
R5 (Breakout Target 1) – 1.3102
R6 (Breakout Target 2) – 1.3115

S1 – 1.3015
S2 – 1.3006
S3 (Range Support – Buy) – 1.2998
S4 (Short Breakout) – 1.2973
S5 (Breakout Target 1) – 1.2944
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 – 1.3001
R1 – 1.3086
R2 – 1.3209
R3 – 1.3294
R4 – 1.3380

S1 – 1.2878
S2 – 1.2793
S3 – 1.2670
S4 – 1.2548

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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