Pounds To Dollars - GBP/USD Daily Spot Chart 16th June 2009

Pounds To Dollars - GBP/USD Daily Spot Chart 16th June 2009

Yesterday’s down candle for the dollars to pounds pair has given us further evidence that the potential “double top” outlined in yesterday’s market commentary may indeed be forming before our very eyes.  However, before we throw caution to the wind and enter multiple short positions may I advance a cautionary note, whilst we pay particularly close attention to the 9 and 14 day moving averages.  In yesterday’s trading these two combined provided support to the low of the day and indeed in today’s price action we have seen a similar effect which may be a warning signal that the top may in fact not evolve at all and could instead be a temporary breather to a further move higher.  Prices in this particular pair are somewhat precariously poised and we need to exercise patience in our trading at present.   The reverse of this is, of course, mirrored in the Dollar Index where we have a similar, but inverse, relationship, and again prices are precariously balanced and could tip either way.  Today’s attempt to move higher has been thwarted and suggests a modicum of bearishness which we may see in due course, but until we see a sustained break below both the 9 and 14 day moving averages my trading recommendation would be to stand aside.  The support now in place at 1.6 will price pivotal in any decisive either way.  Items of fundamental news on the economic calendar have focused on the US and details of these can be found on the main Eurodollar site.  Meanwhile in the UK all the inflation (Core CPI, CPI & RPI) came in marginally better than expected surprising economists to the extent that annual inflation slowed once again in May with the CPI falling to 2.2% from 2.3% in April giving the lowest reading since January 2008.  RPI, the retail prices index, eased slightly due to a smaller increase in average mortgage payments.  All the data pointing to interest rates being kept on hold for the time being.

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.