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Pounds To Dollars – Weekly Candle Chart GBP/USD 8th June 2009

Pounds To Dollars - Weekly Chart 8th June 2009

As promised in Friday’s market analysis of the daily chart, I thought we would look at the weekly chart for the dollars to pounds pair, as this may provide a clue to the future direction for the pair in the medium term. As we can see, and certainly helped by the NFP data on Friday which created a surge in the US dollar, the chart closed last week with a strongly bearish candle suggestive of a shooting star, and coming after a strong rally in the pair, and could well be a signal that the current rally has indeed run out of steam. As a result we should expect to see cable fall in the next few days, possibly to re-test support in the 1.55 region, and if this fails to hold we could see a much deeper move possibly as far 1.52 or lower. All of this is of course against the fundamental backdrop, with investors now sensing that we may be drawing to the end of the recession, and as a result their fears now oscillate between the fear of recession/depression, counterbalanced against their fear of sudden and uncontrolled inflation on the back of low interest rates and an oversupply of money in the financial system. Unfortunately this is likely to be a key feature of the markets for the few months with sudden volatile moves as the fear factor sends investors first one way and then the other.

After the excitement of Friday, there is no fundamental news today, either in the UK or the US , the only other item being a speech by FOMC member Daniel Tarullo later this afternoon who is due to deliver a speech titled “Financial Regulation in the Wake of the Crisis” at the Peterson Institute for International Economics, in Washington DC.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.