Friday’s trade (in GMT terms) saw GBP/USD within the range of 1.2997-1.3249. The pair closed at 1.3004, retreating 1.77% compared to Thursdays close. It has been the 184th drop in the past 340 trading days and also the steepest one since July 5th. The daily low has been a level unseen since August 17th, when a low of 1.2978 was registered. In weekly terms, GBP/USD lost 1.99% of its value during the past week. It has been the 19th drop in the past 37 weeks, a second consecutive one and also the sharpest one since the week ended on July 10th. The major pair has neutralized its earlier advance and is now down 1.03% so far during the current month, after losing 0.72% in August.
At 7:22 GMT today GBP/USD was edging up 0.42% on the day to trade at 1.3058. The pair touched a daily high at 1.3062 during the early phase of the European trading session, undershooting the range resistance level (R3), and a daily low at 1.2997 during early Asian trade.
On Monday GBP/USD trading may be influenced by the following macroeconomic report listed below.
Fundamentals
United States
NAHB Housing Market Index
The National Association of Home Builders (NAHB) Housing Market Index probably remained steady at a reading of 60.0 in September, according to market expectations. If so, September would be the 27th consecutive month, when the gauge stood in the area above 50.0. In August, the sub-index of sales expectations rose to a level of 67.0 from 66.0 in the prior month, the gauge of buyer traffic slipped to 44.0 from 45.0 in July, while the gauge of current sales conditions went up to 65.0 from 63.0 in July.
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 September 16th 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 (0.8919, or very strong)
GBP/USD to NZD/USD (0.7298, or strong)
GBP/USD to AUD/USD (0.5079, or strong)
GBP/USD to USD/JPY (-0.4333, or moderate)
GBP/USD to USD/CAD (-0.7564, or strong)
GBP/USD to USD/CHF (-0.9340, or very strong)
1. During the examined period GBP/USD moved almost equally in the opposite direction compared to USD/CHF, while moving almost equally in one and the same direction with EUR/USD.
2. GBP/USD moved strongly in one and the same direction with AUD/USD and NZD/USD during the past week.
3. GBP/USD moved strongly in the opposite direction compared to USD/CAD during the period in question.
Bond Yield Spread
The yield on UK 2-year government bonds went up as high as 0.163% on September 16th, after which it closed at 0.151% to add 0.002 percentage point compared to September 15th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.778% on September 16th, after which it fell to 0.770% at the close to add 3.6 basis points (0.036 percentage point) compared to September 15th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, widened to 0.619% on September 16th from 0.585% on September 15th. The September 16th yield spread has been the largest one since September 8th, when the difference was 0.628%.
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 – 1.3027
R2 – 1.3050
R3 (Range Resistance – Sell) – 1.3073
R4 (Long Breakout) – 1.3143
R5 (Breakout Target 1) – 1.3224
R6 (Breakout Target 2) – 1.3256
S1 – 1.2981
S2 – 1.2958
S3 (Range Support – Buy) – 1.2935
S4 (Short Breakout) – 1.2865
S5 (Breakout Target 1) – 1.2784
S6 (Breakout Target 2) – 1.2752
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.3117
R1 – 1.3236
R2 – 1.3469
R3 – 1.3588
R4 – 1.3708
S1 – 1.2884
S2 – 1.2765
S3 – 1.2532
S4 – 1.2300
In monthly terms, for GBP/USD we have the following pivots:
Central Pivot Point – 1.3126
R1 – 1.3387
R2 – 1.3634
R3 – 1.3895
R4 – 1.4155
S1 – 1.2879
S2 – 1.2618
S3 – 1.2371
S4 – 1.2123
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