Forex Market: GBP/BGN trading outlook for August 1st

Friday’s trade saw GBP/BGN within the range of 2.3248-2.3337. The pair closed at 2.3337, surging 0.70% compared to Thursdays close. It has been the 20th gain in the past 31 trading days and also the steepest one since July 18th, when the pair rose 0.92%. In weekly terms, GBP/BGN added 0.27% to its value during the current week. It has been the 11th gain in the past 30 weeks. The exotic cross depreciated 1.19% in July, following a 7.84% slump in June.

On Monday (August 1st) GBP/BGN trading may be influenced by the following macroeconomic report as listed below.

Fundamentals

United Kingdom

Manufacturing PMI by Markit/CIPS

Activity in United Kingdom’s sector of manufacturing probably shrank for the first time in three months in July, with the corresponding Purchasing Managers Index coming in at a final reading of 49.1, according to the median forecast by experts, or matching the preliminary estimate, reported on July 22nd. It has been the lowest reading since March 2013, as the sub-gauges of output and new orders both decreased for the first time since early 2013. In June the PMI was reported at 52.1.

The index is based on a survey, encompassing managers of companies, that operate in sectors such as manufacturing, mining, utilities. They are asked about their estimate in regard to current business conditions in the sector in terms of new orders, output, employment, demand in the future. Values below 50.0 signify that respondents are rather pessimists about business conditions in the sector than optimists.

In case the PMI dropped more than projected in July, this would have a strong bearish effect on the Sterling. The Chartered Institute of Purchasing and Supply (CIPS) is expected to release the official PMI reading at 8:30 GMT.

Correlation with other currency pairs

Taking into account the business week ended on July 29th and the daily closing levels of the currency pairs involved, we come to the following conclusions in regard to the strength of relationship:

GBP/BGN to GBP/USD (0.2712, or weak)
GBP/BGN to AUD/USD (0.1005, or weak)
GBP/BGN to USD/CHF (0.0997, or very weak)
GBP/BGN to USD/BGN (0.0939, or very weak)
GBP/BGN to NZD/USD (0.0589, or very weak)
GBP/BGN to USD/CAD (-0.0041, or very weak)
GBP/BGN to CHF/BGN (-0.0884, or very weak)
GBP/BGN to EUR/USD (-0.0981, or very weak)
GBP/BGN to USD/JPY (-0.2134, or weak)

1. During the examined period GBP/BGN moved almost independently compared to USD/CHF, USD/BGN, NZD/USD, USD/CAD, CHF/BGN and EUR/USD. The correlation between GBP/BGN and USD/CAD was almost non-existent.

2. The correlation between GBP/BGN and GBP/USD, GBP/BGN and AUD/USD, GBP/BGN and USD/JPY was insignificant.

Daily, Weekly and Monthly Pivot Levels

By employing the traditional calculation method, the Monday levels of importance for GBP/BGN are presented as follows:

Central Pivot Point – 2.3307
R1 – 2.3367
R2 – 2.3396
R3 – 2.3456
R4 – 2.3515

S1 – 2.3278
S2 – 2.3218
S3 – 2.3189
S4 – 2.3159

By using the traditional method of calculation again, the weekly levels of importance for GBP/BGN are presented as follows:

Central Pivot Point – 2.3294
R1 – 2.3425
R2 – 2.3513
R3 – 2.3644
R4 – 2.3775

S1 – 2.3206
S2 – 2.3075
S3 – 2.2987
S4 – 2.2899

In monthly terms, for GBP/BGN we have the following pivots:

Central Pivot Point – 2.3183
R1 – 2.3622
R2 – 2.3908
R3 – 2.4347
R4 – 2.4787

S1 – 2.2897
S2 – 2.2458
S3 – 2.2172
S4 – 2.1887