Forex Market: EUR/GBP daily trading forecast

Friday’s trade saw EUR/GBP within the range of 0.6934-0.6989. The pair closed at 0.6937, down 0.43% on a daily basis and marking the fifth consecutive trading day of losses. The daily low has also been the lowest level since November 5th 2007, when the cross recorded a low of 0.6933. The pair depreciated 3.53% on a weekly basis, which has been the first drop in the past three weeks and also the sharpest weekly decline since the week ended on February 1st 2009, when a 6.33% slump was registered.

At 13:26 GMT today EUR/GBP was up 0.24% for the day to trade at 0.6963. The pair touched a daily high at 0.6976 at 12:19 GMT.

Correlation with other pairs

Taking into account the week ended on July 19th and the daily closing levels of the currency pairs involved, we come to the following conclusions in regard to the strength of relationship:

EUR/GBP to EUR/USD (0.9139, or very strong)
EUR/GBP to NZD/USD (0.9007, or very strong)
EUR/GBP to AUD/USD (0.5318, or strong)
EUR/GBP to GBP/USD (-0.6596, or strong)
EUR/GBP to USD/CHF (-0.7843, or strong)
EUR/GBP to USD/JPY (-0.8916, or very strong)
EUR/GBP to USD/CAD (-0.9054, or very strong)

1. During the examined period EUR/GBP moved almost equally in one and the same direction with EUR/USD and NZD/USD.

2. EUR/GBP moved almost equally in the opposite direction compared to USD/JPY and USD/CAD during the past week.

3. EUR/GBP moved strongly in one and the same direction with AUD/USD, while moving strongly in the opposite direction compared to GBP/USD and USD/CHF.

Bond Yield Spread

The yield on German 2-year government bonds went as high as -0.209% on July 17th, after which it slid to -0.215% at the close to gain 0.002 percentage point on a daily basis, while marking a second straight day of increase.

The yield on UK 2-year government bonds climbed as high as 0.659% on July 17th, after which it fell to 0.641% at the close to gain 2.8 basis points (0.028 percentage point) for the day.

The spread between 2-year UK and 2-year German bond yields, which reflects the flow of funds in a short term, expanded to 0.856% on July 17th from 0.825% during the prior day. The July 17th spread has been the most notable one since July 15th, when the difference was 0.864%.

Meanwhile, the yield on German 10-year government bonds soared as high as 0.832% on July 17th, or the highest level since July 15th (0.847%), after which it slid to 0.790% at the close to 0.002 percentage point compared to July 16th.

The yield on UK 10-year government bonds climbed as high as 2.105% on July 17th, after which it slipped to 2.079% at the close to lose 1 basis point (0.01 percentage point) on a daily basis, while marking a second consecutive day of decrease.

The spread between 10-year UK and 10-year German bond yields narrowed to 1.289% on July 17th from 1.290% during the prior day. The July 17th yield difference has been the lowest one since July 13th, when the spread was 1.253%.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.6953. In case EUR/GBP manages to breach the first resistance level at 0.6973, it will probably continue up to test 0.7008. In case the second key resistance is broken, the pair will probably attempt to advance to 0.7028.

If EUR/GBP manages to breach the first key support at 0.6918, it will probably continue to slide and test 0.6898. With this second key support broken, the movement to the downside will probably continue to 0.6863.

The mid-Pivot levels for today are as follows: M1 – 0.6881, M2 – 0.6908, M3 – 0.6936, M4 – 0.6963, M5 – 0.6991, M6 – 0.7018.

In weekly terms, the central pivot point is at 0.7024. The three key resistance levels are as follows: R1 – 0.7114, R2 – 0.7291, R3 – 0.7381. The three key support levels are: S1 – 0.6847, S2 – 0.6757, S3 – 0.6580.