Friday’s trade (in GMT terms) saw GBP/USD within the range of 1.3023-1.3186. The pair closed at 1.3077, losing 0.68% compared to Thursdays close. It has been the 175th drop in the past 320 trading days and also the steepest one since August 4th. The daily high has been a level unseen since August 4th, when a high of 1.3347 was registered. In weekly terms, GBP/USD added 1.25% to its value during the past week. It has been the 16th gain in the past 33 weeks and also the sharpest one since the week ended on July 17th. The major pair has increased its decline to 1.19% so far during the current month, after losing 0.59% of its value in July.
At 6:41 GMT today GBP/USD was edging down 0.21% on the day to trade at 1.3050. The pair touched a daily high at 1.3086 during the early phase of the Asian trading session, undershooting the daily R1 level, and a daily low at 1.3034 during late Asian trade.
No relevant macroeconomic reports and other events, which may influence GBP/USD trading, are scheduled on Monday.
Correlation with other Majors
Taking into account the business week ended on August 19th 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 EUR/USD (0.9860, or very strong)
GBP/USD to NZD/USD (0.9296, or very strong)
GBP/USD to AUD/USD (0.0100, or very weak)
GBP/USD to USD/CAD (-0.9249, or very strong)
GBP/USD to USD/JPY (-0.9822, or very strong)
GBP/USD to USD/CHF (-0.9998, or very strong)
1. During the examined period GBP/USD moved almost equally in one and the same direction with NZD/USD and EUR/USD. This relationship has been the most pronounced between GBP/USD and EUR/USD, with the correlation between these pairs being almost perfect.
2. GBP/USD moved almost equally in the opposite direction compared to USD/CAD, USD/JPY and USD/CHF during the past week. This relationship has been the most pronounced between GBP/USD and USD/CHF, with the correlation between the two pairs being almost perfect.
3. GBP/USD moved almost independently compared to AUD/USD during the period in question.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.168% on August 19th, after which it closed at 0.159% to add 1.7 basis points (0.017 percentage point) compared to August 18th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.754% on August 19th, after which it fell to 0.750% at the close to add 4 basis points (0.04 percentage point) compared to August 18th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, widened to 0.591% on August 19th from 0.568% on August 18th. The August 19th yield spread has been the largest one since August 11th, when the difference was 0.602%.
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 – 1.3092
R2 – 1.3107
R3 (Range Resistance – Sell) – 1.3122
R4 (Long Breakout) – 1.3167
R5 (Breakout Target 1) – 1.3219
R6 (Breakout Target 2) – 1.3241
S1 – 1.3062
S2 – 1.3047
S3 (Range Support – Buy) – 1.3032
S4 (Short Breakout) – 1.2987
S5 (Breakout Target 1) – 1.2935
S6 (Breakout Target 2) – 1.2913
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.3043
R1 – 1.3220
R2 – 1.3363
R3 – 1.3540
R4 – 1.3717
S1 – 1.2900
S2 – 1.2723
S3 – 1.2580
S4 – 1.2437
In monthly terms, for GBP/USD we have the following pivots:
Central Pivot Point – 1.3171
R1 – 1.3546
R2 – 1.3858
R3 – 1.4233
R4 – 1.4608
S1 – 1.2859
S2 – 1.2484
S3 – 1.2172
S4 – 1.1860
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