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Forex Market: GBP/USD trading outlook for October 11th 2016


Yesterday’s trade (in GMT terms) saw GBP/USD within the range of 1.2344-1.2446. The pair closed at 1.2361, shedding 0.60% from Fridays close. It has been the 192nd drop in the past 356 trading days and also a third consecutive one. The major pair has increased its slump to 4.75% so far during the current month, after losing 1.23% in September.

At 6:54 GMT today GBP/USD was edging down 0.44% on the day to trade at 1.2306. The pair touched a daily high at 1.2378 during the early phase of the Asian trading session, undershooting the daily R2 level, and a daily low at 1.2301 during mid-Asian trade.

No relevant macroeconomic reports and other events, which may influence GBP/USD trading, are scheduled on Tuesday.

Bond Yield Spread

The yield on UK 2-year government bonds went up as high as 0.238% on October 10th, or the highest level since June 30th (0.249%), after which it closed at 0.236% to add 5.2 basis points (0.052 percentage point) compared to October 7th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.870% on October 10th, after which it fell to 0.869% at the close to add 3.1 basis points (0.031 percentage point) compared to October 7th.

The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, narrowed to 0.633% on October 10th from 0.654% on October 7th. The October 10th yield spread has been the lowest one since September 16th, when the difference was 0.619%.

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 – 1.2370
R2 – 1.2380
R3 (Range Resistance – Sell) – 1.2389
R4 (Long Breakout) – 1.2417
R5 (Breakout Target 1) – 1.2450
R6 (Breakout Target 2) – 1.2463

S1 – 1.2352
S2 – 1.2342
S3 (Range Support – Buy) – 1.2333
S4 (Short Breakout) – 1.2305
S5 (Breakout Target 1) – 1.2272
S6 (Breakout Target 2) – 1.2259

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

Central Pivot Point – 1.2443
R1 – 1.2940
R2 – 1.3444
R3 – 1.3941
R4 – 1.4437

S1 – 1.1939
S2 – 1.1442
S3 – 1.0938
S4 – 1.0433

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

Central Pivot Point – 1.3113
R1 – 1.3312
R2 – 1.3645
R3 – 1.3844
R4 – 1.4042

S1 – 1.2780
S2 – 1.2581
S3 – 1.2248
S4 – 1.1914

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