pounds to dollars

Pounds to Dollars Chart 15 Oct 2010

The pounds to dollars pair continues to climb higher, albeit in a relatively muted manner, with yesterday’s narrow spread up candle exhibiting a degree of weakness as characterised by a deep upper wick to the body of the candle.  However, this has failed to convert into any meaningful pullback in this morning’s early trading, with the pair moving higher once again to trade at time of writing at USD1.6050.  From a technical perspective the key level overnight was the breach of the USD1.5994 price handle which had presented potential resistance to any continuation of the recent bullish trend and provided we hold above this level in today’s forex trading session then this should provide a further level of support to the move higher.  The trend is fully supported by both the 9 and 14 day moving averages, along with the 40 day which is now beginning to slope higher once again, and we now only await a turn in the 200 day for a confirmation of any longer term bullish trend.  As we are now pushing deep into the resistance between USD1.58 and US1.68 to the upside any move higher will need some additional momentum but this is likely to come from the QE2 programme in the US which is due to start in the next couple of weeks, which will no doubt provide the impetus to push cable towards the USD1.6876 and possibly beyond in due course.

The fundamental news today is dominated by a speech from Fed Chairman Bernanke entitled “Monetary Policy Objectives & Tools in a Low Inflation Environment” – never has such a dry subject been so eagerly awaited, although the markets are also waiting for core CPI, core retail sales & the UoM consumer sentiment numbers expected later this afternoon.