Pound vs Dollar - Daily Candle Chart For GBP/USD 6th July 2009

Pound vs Dollar - Daily Candle Chart For GBP/USD 6th July 2009

It now appears that the turning point for the dollars to pounds pair was the shooting star candle of Tuesday 30th June which was created following the dire UK GDP figures and since then we have been waiting for this candle either to be validated or ignored by future price action.  Friday’s candle provided little in the way of any confirming evidence, other than the high of the day failed to breach the 9 and 14 day moving averages which proved resistant to any recovery, and the key fundamental news on the economic calendar actually came over the weekend in the form of a speech by ECB President Trichet whose rhetoric firmly endorsed the US Dollar as the preferred reserve currency for the world.  As a result there has been a rebound in Dollar strength in this morning’s trading session with a consequent fall in the pounds to dollars pair.  The key to any deeper move will be defined, firstly by a break and hold below the 40 day moving average, followed by penetration of the support now in place at the 1.60 price region.   Should the latter fail to provide a cushion then we may well see a significantly deeper reversal, possibly as far as the 1.52 intermediate support level which is waiting below.   With no news on the economic calendar today for the UK, the only significant item comes later in the trading session in the US with the release of the ISM non manufacturing PMI Data which is forecast at 45.9 against a previous of 44.  Given that this data is seen as a leading indicator it will be interesting to see the market’s reaction should the numbers come in better than expected.

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