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Forex Pounds To Dollars – 14th Dec 2009

Pound Dollar Chart - 14th December 2009

Pound Dollar Chart - 14th December 2009

Friday’s price action for the pounds to usd currency pair followed the same pattern as for Wednesday and Thursday, ending the trading session with a doji cross candle signifying an indecisive market which clearly lacks any firm direction at present.  Whilst the price action is frustrating for longer term trend traders, it is interesting to note two aspects of the pounds to usd pair: firstly the lack of positive correlation with the euro dollar and, secondly, its apparent lack of correlation to the US dollar.  The second of these points was most noticeable on Friday where a strong surge in the US dollar was not reflected in the pounds to usd pair to any great extent and clearly Sterling is holding its own despite the market’s view of the US dollar against the Euro.  Indeed against both the Euro and Japanese Yen Sterling is remaining remarkably resilient – is this the lull before the storm?  Technically the short term still remains bearish for Sterling as prices are firmly below all three moving averages and with the 40 day moving above both the 9 and 14 day this is adding further bearish sentiment.  However, given the apparent lack of correlation with the euro dollar & to the US dollar itself the longer term market direction is far from clear at present and only a sustained break and hold below the USD1.59 price point would confirm that the recent and well established sideways consolidation has finally come to end.

With no significant items of fundamental news for either the UK or the US until Tuesday when we have CPI for the UK coupled with the PPI in the US, we may just see a continuation of the recent sideways price action as markets begin to wind down for both year end and Christmas.

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