Yesterday’s trade saw EUR/GBP within the range of 0.7061-0.7118. The pair closed at 0.7108, up 0.26% on a daily basis and marking the first gain in the past three trading days. The daily low has also been the lowest level since August 11th, when the cross registered a low of 0.7037.
At 12:08 GMT today EUR/GBP was down 0.87% for the day to trade at 0.7046. The pair overcame the lower range breakout level (S4), as it touched a daily low at 0.7040 at 10:45 GMT. It is now the new lowest level since August 11th. The cross may receive support within the 0.7015-0.7035 area.
The sterling was largely supported, following the positive consumer inflation report released by the UK Office for National Statistics, which showed an annual inflation rate of 0.1% in July, while expectations pointed to a flat performance. The data favored the outlook for an interest rate hike at some point this year.
Bond Yield Spread
The yield on German 2-year government bonds went as high as -0.251% on August 17th, or the highest level since August 7th (-0.237%), after which it slid to -0.260% at the close to gain 0.007 percentage point on a daily basis.
The yield on UK 2-year government bonds climbed as high as 0.610% on August 17th, or the highest level since August 11th (0.620%), after which it fell to 0.586% at the close to gain 0.008 percentage point for the day, while marking the third consecutive trading day of gains.
The spread between 2-year UK and 2-year German bond yields, which reflects the flow of funds in a short term, widened to 0.846% on August 17th from 0.845% on August 14th. The August 17th yield spread has been the most notable one since August 11th, when the difference was 0.850%.
Meanwhile, the yield on German 10-year government bonds soared as high as 0.663% on August 17th, or the same high as reported on August 14th, after which it slid to 0.631% at the close to depreciate 2.6 basis points (0.026 percentage point) compared to August 14th. It has been the first decrease in the past three trading days.
The yield on UK 10-year government bonds climbed as high as 1.878% on August 17th, after which it slipped to 1.820% at the close to lose 5.9 basis points (0.059 percentage point) on a daily basis. It has been the first drop in the past three trading days.
The spread between 10-year UK and 10-year German bond yields narrowed to 1.189% on August 17th from 1.222% on August 14th. The August 17th yield difference has been the lowest one since July 10th, when the spread was 1.178%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for EUR/GBP are presented as follows:
R1 – 0.7113
R2 – 0.7118
R3 (range resistance – green on the 1-hour chart) – 0.7124
R4 (range breakout – red on the 1-hour chart) – 0.7139
S1 – 0.7103
S2 – 0.7098
S3 (range support – green on the 1-hour chart) – 0.7092
S4 (range breakout – red on the 1-hour chart) – 0.7077
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
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