Friday’s trade (in GMT terms) saw GBP/USD within the range of 1.3133-1.3481. The pair closed at 1.3182, losing 1.20% compared to Thursdays close. It has been the 160th drop in the past 295 trading days and also the steepest one since July 5th, when the pair retreated 2.01%. The daily high has been the highest level since June 30th, when a high of 1.3500 was registered. In weekly terms, GBP/USD added 1.83% to its value during the past week. It has been the 14th gain in the past 28 weeks and also the steepest one since the week ended on March 6th, when the cross appreciated 2.57%. The major pair has neutralized earlier advance and is now down 0.68% so far during the current month, after depreciating 8.06% in June.
At 7:01 GMT today GBP/USD was gaining 0.32% on the day to trade at 1.3224. The pair touched a daily high at 1.3270 during the early phase of the Asian trading session, undershooting the range resistance level (R3), and a daily low at 1.3190 during early Asian trade as well.
On Monday GBP/USD trading may be influenced by the following macroeconomic report as listed below.
Fundamentals
United States
NAHB Housing Market Index
The National Association of Home Builders (NAHB) Housing Market Index was probably unchanged at a reading of 60.0 in July, according to market expectations. If so, July would be the 25th consecutive month, when the gauge stood in the area above 50.0. In June, the sub-index of sales expectations advanced to 70.0 from 65.0 in the prior month, the gauge of buyer traffic rose to 47.0 from 44.0 in May, while the gauge of current sales conditions ticked up to 64.0 from 63.0 in May.
The indicator is based on a monthly survey in regard to current home sales and expected sales in the coming six months. Values above the key level of 50.0 indicate that housing market conditions are good. Therefore, higher-than-projected readings would provide a moderate support to the US dollar. The official report is scheduled for release at 14:00 GMT.
Correlation with other Majors
Taking into account the business week ended on July 15th 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/JPY (0.9514, or very strong)
GBP/USD to AUD/USD (0.9029, or very strong)
GBP/USD to EUR/USD (0.5084, or strong)
GBP/USD to NZD/USD (-0.0467, or very weak)
GBP/USD to USD/CHF (-0.0558, or very weak)
GBP/USD to USD/CAD (-0.8326, or very strong)
1. During the examined period GBP/USD moved strongly in one and the same direction with EUR/USD.
2. GBP/USD moved almost equally in one and the same direction with AUD/USD and USD/JPY during the past week, while moving almost equally in the opposite direction compared to USD/CAD.
3. GBP/USD moved almost independently compared to NZD/USD and USD/CHF during the period in question.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.181% on July 15th, after which it closed at 0.163% to add 1.6 basis points (0.016 percentage point) compared to July 14th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.714% on July 15th, or the highest level since June 24th (0.755%), after which it fell to 0.681% at the close to add 0.004 percentage point compared to July 14th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, narrowed to 0.518% on July 15th from 0.530% on July 14th. The July 15th yield spread has been the lowest one since July 12th, when the difference was 0.494%.
Daily, Weekly and Monthly Pivot Levels
By employing the Camarilla calculation method, the daily levels of importance for GBP/USD are presented as follows:
R1 – 1.3214
R2 – 1.3246
R3 (Range Resistance – Sell) – 1.3278
R4 (Long Breakout) – 1.3373
R5 (Breakout Target 1) – 1.3485
R6 (Breakout Target 2) – 1.3531
S1 – 1.3150
S2 – 1.3118
S3 (Range Support – Buy) – 1.3086
S4 (Short Breakout) – 1.2991
S5 (Breakout Target 1) – 1.2879
S6 (Breakout Target 2) – 1.2833
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.3174
R1 – 1.3500
R2 – 1.3806
R3 – 1.4132
R4 – 1.4457
S1 – 1.2868
S2 – 1.2542
S3 – 1.2236
S4 – 1.1929
In monthly terms, for GBP/USD we have the following pivots:
Central Pivot Point – 1.3817
R1 – 1.4517
R2 – 1.5722
R3 – 1.6422
R4 – 1.7121
S1 – 1.2612
S2 – 1.1912
S3 – 1.0707
S4 – 0.9501
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