Pound Dollar Chart 22 Jan 2010

An interesting day on the daily chart for the pounds to usd pair following Tuesday’s shooting star candle and which has led to the pound dollar breaking below all three of our short term moving averages (9,14 & 40 day) and, perhaps more significantly, below the longer term 200 day moving average.  With this technical picture the pounds to usd now seems destined to continue to reverse lower once again & retest the floor of the recent sideways consolidation at USD1.59 price handle.  Any break here could see a deeper move towards USD1.5250 or the pair could follow the recent pattern & simply turn back once again.

The only item of fundamental news this morning relevant to the pounds to dollars pair was the release of the retail sales figures in the UK which came in far worse than expected at 0.3% against a forecast of 1.3% which only added to the bearish sentiment towards sterling.  With no news in the US, markets are instead focusing on the Obama banking proposals which propose an overhaul of the banking system and which have caused havoc across equity markets.  This has followed an already nervous week which saw market confidence wavering at the levels of sovereign debt (Greece & Portugal to name but two) and over a possible tightening of Chinese monetary policy.

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