Friday’s trade saw GBP/USD within the range of 1.5076-1.5157. The pair closed at 1.5112, down 0.22% on a daily basis and following a 1.30% surge on Thursday, or the largest one since October 14th, when it appreciated 1.50%. In weekly terms, GBP/USD went up 0.50% last week, following two consecutive weeks of losses. The pair has inched up 0.02% so far during the current month.
At 9:05 GMT today GBP/USD was losing 0.24% for the day to trade at 1.5076. The pair touched a daily low at 1.5055 at 8:25 GMT, overshooting the lower range breakout level (S4). Short-term support may be received in the 1.5025-1.5040 area, while resistance may be encountered in the zone around the current daily high of 1.5115.
Today GBP/USD trading may be influenced by the macroeconomic report listed below.
Fundamentals
United States
Change in consumer credit
The money amounts, borrowed by consumers probably increased by USD 20.0 billion in October, according to market expectations, following a surge by USD 28.92 billion in September. The latter was mostly supported by non-revolving credit (auto and student loans), which rose by USD 22.23 billion. In addition, revolving credit (credit cards mostly), grew by USD 6.69 billion in September.
Given the current state of the economy, a higher-than-expected amount borrowed is usually considered as dollar positive, as it implies a potential increase in consumer spending and accelerated growth, respectively. The Board of Governors of the Federal Reserve is to release the official numbers at 20:00 GMT.
Correlation with other Majors
Taking into account the week ended on December 6th and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:
GBP/USD to USD/CAD (0.7798, or strong)
GBP/USD to EUR/USD (0.7322, or strong)
GBP/USD to NZD/USD (0.5266, or strong)
GBP/USD to AUD/USD (0.3596, or moderate)
GBP/USD to USD/CHF (-0.5909, or strong)
GBP/USD to USD/JPY (-0.7139, or strong)
1. During the examined period GBP/USD moved strongly in one and the same direction with USD/CAD, EUR/USD and NZD/USD.
2. GBP/USD moved strongly in the opposite direction compared to USD/CHF and USD/JPY during the past week.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.709% on December 4th, or the highest level since November 12th (0.733%), after which it closed at 0.655% to lose 0.004 percentage point compared to December 3rd. It has been the first drop in the past three trading days.
The yield on US 2-year government bonds climbed as high as 0.991% on December 4th, after which it closed at 0.947% to lose 1.2 basis points (0.012 percentage point) compared to December 3rd. It has been the third drop in the past 15 trading days.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, shrank to 0.292% on December 4th from 0.300% on December 3rd. The December 4th yield spread has been the lowest one since November 19th, when the difference was 0.259%.
Meanwhile, the yield on UK 10-year government bonds soared as high as 1.982% on December 4th, or the highest level since November 17th (1.997%), after which it slid to 1.929% at the close to add 4.4 basis points (0.044 percentage point) compared to December 3rd. It has been the fourth gain in the past ten trading days and also a second consecutive one.
The yield on US 10-year government bonds climbed as high as 2.358% on December 4th, or the highest level since November 9th (2.377%), after which it slipped to 2.273% at the close to lose 4.8 basis points (0.048 percentage point) compared to December 3rd. It has been the eighth drop in the past ten trading days.
The spread between 10-year US and 10-year UK bond yields shrank to 0.344% on December 4th from 0.436% on December 3rd. The December 4th yield difference has been the lowest one since November 25th, when the spread was 0.340%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for GBP/USD are presented as follows:
R1 – 1.5119
R2 – 1.5127
R3 (range resistance) – 1.5134
R4 (range breakout) – 1.5158
S1 – 1.5105
S2 – 1.5097
S3 (range support) – 1.5090
S4 (range breakout) – 1.5066
By using the traditional method of calculation, the weekly pivot levels for GBP/USD are presented as follows:
Central Pivot Point – 1.5055
R1 – 1.5217
R2 – 1.5322
R3 – 1.5484
S1 – 1.4950
S2 – 1.4788
S3 – 1.4683
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