Pound Dollar Chart 25 Jan 2010

Last week was an interesting one for the pounds to usd pair with Tuesday’s deep shooting star candle signalling the subsequent sell off and reversal which took Friday’s close well below all the moving averages once again, continuing the roller coaster ride of sideways price action that we have come to know and love.  Whilst the short term outlook remains mildly bearish it would come as no surprise to see cable reverse higher once again (which has happened in today’s trading session) but particularly if we retest the USD1.59 floor of the current sideways price channel.  Indeed with the FOMC meeting taking place on Wednesday and subsequent statement this could trigger a degree of volatility into the pair once again with any dollar weakness converting to pound strength.  Longer term until we see a break above USD1.68 or a break below USD1.59 the pounds to usd pair looks set to consolidate further for the time being.

Tomorrow’s GDP figures for the UK could provide some interesting price action with the current forecast being 0.4% against a previous of -0.2% and no doubt Gordon Brown will be hoping for some good news here so he can announce the official end to the current recession.

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