Yesterday’s trade saw EUR/GBP within the range of 0.7084-0.7168. The pair closed at 0.7166, surging 1.06% on a daily basis, or the most considerable daily gain since July 23rd, when it appreciated 1.09%. The daily high has also been the highest level since August 12th, when the cross reached a high of 0.7171.
At 12:57 GMT today EUR/GBP was up 0.51% for the day to trade at 0.7200. The pair overshot the upper range breakout level (R4), as it touched a daily high at 0.7217 at 12:42 GMT. It has been the highest level since July 10th, when a daily high of 0.7226 was reached.
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
Euro area
Consumer Confidence Index – preliminary estimate
Confidence among consumers in the Euro area probably showed a slight improvement in August. The preliminary value of the consumer confidence index probably rose to -6.9 from a final value of -7.1 in July. The latter was a confirmation of the preliminary index reading reported on July 23rd. The index measures consumer confidence on a scale of -100 to +100. A reading of -100 suggests a lack of confidence, zero means neutrality and a reading of +100 indicates extreme levels of confidence. The index reflects the level of optimism, which consumers have about economic development in the region. The Business and Consumer Survey is conducted by phone and includes 23 000 households in the Euro area. The questions asked stress on current economic and financial situation, savings intention and also on expected developments regarding consumer price indexes, general economic situation and major purchases of durable goods. This indicator is one of the five major components, that comprise the Economic Sentiment Indicator (ESI).
Higher confidence usually implies greater willingness to spend, including large-ticket purchases, while consumer spending is among the key factors driving economic growth. Therefore, in case the consumer confidence index improved more than anticipated, this would cause a moderate bullish impact on the euro. The European Commission is expected to release the preliminary reading at 14:00 GMT.
Bond Yield Spread
The yield on German 2-year government bonds went as high as -0.251% on August 20th, after which it slid to -0.259% at the close to lose 0.005 percentage point on a daily basis, while marking a second straight trading day of decline.
The yield on UK 2-year government bonds climbed as high as 0.572% on August 20th, after which it fell to 0.550% at the close to lose 1.1 basis points (0.011 percentage point) for the day, while marking a second consecutive day of decline.
The spread between 2-year UK and 2-year German bond yields, which reflects the flow of funds in a short term, narrowed to 0.809% on August 20th from 0.815% on August 19th. The August 20th 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 0.618% on August 20th, after which it slid to 0.582% at the close to depreciate 5.1 basis points (0.051 percentage point) compared to August 19th, while marking a second consecutive day of decrease.
The yield on UK 10-year government bonds climbed as high as 1.805% on August 20th, after which it slipped to 1.750% at the close to lose 9.4 basis points (0.094 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 1.168% on August 20th from 1.211% on August 19th. The August 20th yield difference has been the lowest one since June 12th, when the spread was 1.143%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for EUR/GBP are presented as follows:
R1 – 0.7174
R2 – 0.7181
R3 (range resistance – green on the 30-minute chart) – 0.7189
R4 (range breakout – red on the 30-minute chart) – 0.7212
S1 – 0.7158
S2 – 0.7151
S3 (range support – green on the 30-minute chart) – 0.7143
S4 (range breakout – red on the 30-minute chart) – 0.7120
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