Forex Market: EUR/GBP daily trading forecast

Yesterday’s trade saw EUR/GBP within the range of 0.7033-0.7099. The pair closed at 0.7091, surging 0.77% on a daily basis, or the most considerable daily gain since August 12th, when it added 0.79%.

At 12:11 GMT today EUR/GBP was up 0.63% for the day to trade at 0.7136. The pair overcame the upper range breakout level (R4), as it touched a daily high at 0.7149 at 9:45 GMT. It has been the highest level since August 14th, when a daily high of 0.7159 was reached. Resistance may be expected within the 0.7155-0.7170 area.

The sterling lost ground sharply against the euro and the US dollar earlier today, after it became clear that UK annualized retail sales climbed at a lesser rate than expected in July, 4.2% instead of 4.4%. In addition, retail sales recorded a slower-than-anticipated monthly rate of increase last month, 0.1% instead of 0.4%.

Bond Yield Spread

The yield on German 2-year government bonds went as high as -0.241% on August 19th, or matching the high from the previous trading day, after which it slid to -0.252% at the close to remain unchanged on a daily basis.

The yield on UK 2-year government bonds climbed as high as 0.628% on August 19th, or the highest level since August 10th (0.648%), after which it fell to 0.547% at the close to lose 3.9 basis points (0.039 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, narrowed to 0.799% on August 19th from 0.838% on August 18th. The August 19th yield spread has been the lowest one since July 31st, when the difference was 0.788%.

Meanwhile, the yield on German 10-year government bonds soared as high as 0.665% on August 19th, or the highest level since August 11th (0.679%), after which it slid to 0.618% at the close to depreciate 2.2 basis points (0.022 percentage point) compared to August 18th. It has been the second drop in the past three trading days.

The yield on UK 10-year government bonds climbed as high as 1.901% on August 19th, or the highest level since August 14th (1.906%), after which it slipped to 1.830% at the close to lose 4.3 basis points (0.043 percentage point) on a daily basis.

The spread between 10-year UK and 10-year German bond yields narrowed to 1.212% on August 19th from 1.233% on August 18th. The August 19th yield difference has been the lowest one since August 17th, when the spread was 1.190%.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for EUR/GBP are presented as follows:

R1 – 0.7097
R2 – 0.7103
R3 (range resistance – green on the 30-minute chart) – 0.7109
R4 (range breakout – red on the 30-minute chart) – 0.7127

S1 – 0.7085
S2 – 0.7079
S3 (range support – green on the 30-minute chart) – 0.7073
S4 (range breakout – red on the 30-minute chart) – 0.7055

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

Central Pivot Point – 0.7103
R1 – 0.7168
R2 – 0.7237
R3 – 0.7302

S1 – 0.7034
S2 – 0.6969
S3 – 0.6900