The 07:00 London pre-open drift on EURGBP: noise or a tell?

[FXS London Scalper]

EURGBP between 07:00 and 07:59 London time, before the cash open proper, is sleepy, often a 4 to 7 pip range. The question is whether that drift points anywhere for the first half hour after 08:00.

A simple way to test it in a notebook:

• At 07:59, note which way price has drifted since 07:00 and by how many pips.
• At 08:30, record whether the move since 08:00 went the same way.
• Mark UK data days at 07:00 (GDP, retail sales) separately, because they change the picture completely.

How to judge the result: with 30 sessions, getting 17 continuations out of 29 sounds good, but the chance of 17 or more heads in 29 fair coin flips is about 23%. You'd need closer to 20 out of 29, or a much bigger sample, before calling it a lean. It's also worth splitting by drift size; a drift under 3 pips is likely to be noise.

The more certain benefit is cost. EURGBP spreads at many brokers are noticeably wider at 07:30 than by 08:10, so waiting ten minutes after the open is often cheaper than chasing the drift, whatever the drift says.

Has anyone tracked this pair's pre-open over a long stretch, or do you just ignore it?

[Amanhasnoname]

I logged EURGBP pre-open for about four months last year, mostly because I was already at the desk by 06:50 with nothing better to do. My result was close to your coin-flip warning. Out of roughly 80 non-data sessions, continuation after 08:00 happened a little over half the time, and when I threw out the drifts smaller than three pips it rose only slightly, nowhere near enough to trade on its own.

The part that did help was splitting by what sterling was doing against the dollar at the same time. When cable was drifting the same way as EURGBP before 08:00, the move after the open carried on noticeably more often than when the euro alone was doing the work. That at least gave me a reason to pay attention rather than a signal.

I agree completely about the spread. On my account EURGBP at 07:40 is often double what it is at 08:15, so even when I think the drift means something I wait for the first ten minutes to settle before touching it.