At 7:34 GMT today GBP/USD was up 0.06% for the day to trade at 1.4234. The pair touched a daily low at 1.4205 at 4:50 GMT and a daily high at 1.4241 at 6:39 GMT, making an exact test of the daily R1 level. Resistance may be encountered at the high from January 21st (1.4249) and then – at the hourly 200-period EMA (1.4307). Support, on the other hand, may be received at the hourly 55-period EMA (1.4199). In case of a break and close below it, the next support may be expected within the 1.4135-1.4150 area.
On Friday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United Kingdom
Retail sales
Annualized retail sales in the United Kingdom probably rose at a rate of 4.3% in December, according to the median forecast by experts, after in November sales increased by another 5.0%. If so, December would be the 33rd consecutive month of sales growth.
In monthly terms, retail sales probably fell 0.3% in December, according to market expectations. In November retail sales went up 1.7%, or the most since September, when a monthly rate of 1.9% was reported. Black Friday promotions were the main contributor to higher demand in late November.
Annualized retail sales, without taking into account fuel sales, probably surged 3.5% in December, following a 3.9% increase in November. If expectations were met, December would be the 44th 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 index of retail sales increased at a faster-than-expected pace, this would be pound positive. The Office for National Statistics is expected to publish the official report at 9:30 GMT.
United States
Manufacturing PMI by Markit – preliminary reading
Manufacturing activity in the United States probably was little changed in January, with the corresponding preliminary Purchasing Managers' Index coming in at a reading of 51.1, according to market expectations. If so, this would be the lowest reading since October 2012, when the PMI was reported at 51.0. In December the final seasonally adjusted PMI stood at 51.2, down from a preliminary 51.3.
According to Markit's statement: "…new order levels expanded only fractionally and at the weakest pace since September 2009. Anecdotal evidence cited softer underlying demand conditions, intense competition for new work and subdued business confidence among clients. Export sales were also close to stagnation in December, with manufacturers noting that the strong dollar continued to act as a drag on demand from abroad."
"Manufacturing production growth moderated in response to weaker than expected new business intakes during December. The latest expansion of output levels was the least marked since October 2013. At the same time, capacity pressures eased in December, with backlogs of work decreasing at the fastest pace since September 2009. Nonetheless, payroll numbers rose at a solid rate that was slightly faster than seen during the previous month. This marked two-and-a-half years of sustained job creation across the manufacturing sector, and the pace of expansion was close to the average seen over this period."
"Input prices continued to fall during the latest survey period, with the rate of decline accelerating slightly since November. Manufacturers commented on falling costs for a range of raw materials, particularly steel. However, factory gate charges rose for the third month running. Although only modest, the rate of output charge inflation picked up to its fastest since August."
Values above the key level of 50.0 indicate optimism (expanding activity). In case the flash manufacturing PMI showed a worse-than-anticipated performance, this would have a moderate bearish effect on the US dollar. The preliminary PMI reading by Markit Economics is due out at 14:45 GMT.
Existing Home Sales
The index of existing home sales in the United States probably advanced 8.5% to a level of 5.18 million in December compared to November, according to the median estimate by experts. In November sales were 10.5% lower from a month ago to reach 4.76 million, or the lowest level since April 2014, when a figure of 4.66 million was reported. The introduction of new regulations on paperwork for home purchases was the reason behind the sharp drop in November. Sales of new single-family houses slumped 12.1% during the month, while sales of condos were up 1.7%. The median sales price climbed 0.4% in November.
In case the index rose at a steeper monthly rate than anticipated, this would have a limited-to-moderate bullish effect on the US dollar. The National Association of Realtors (NAR) is to release the official figure at 15:00 GMT.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.4241
R2 – 1.4256
R3 (range resistance) – 1.4272
R4 (range breakout) – 1.4319
S1 – 1.4209
S2 – 1.4194
S3 (range support) – 1.4178
S4 (range breakout) – 1.4132
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.4371
R1 – 1.4494
R2 – 1.4731
R3 – 1.4854
S1 – 1.4134
S2 – 1.4011
S3 – 1.3774
