Pound Dollar Chart 17 May 2010

Cable continues to march south with this morning’s gapped down opening adding further momentum to an already heavily bearish picture with sterling testing USD1.4250 in early trading before recovering somewhat to USD1.44 as the date of the UK budge was duly announced.  However, despite this short term bounce higher expect to see the pound dollar move much lower in the medium term with USD1.41 the first key support price and should this fail to hold then expect to see a re-test of the sustained support in the USD1.38-USD1.37 price zone which now looks increasingly likely.  With all four daily moving averages pointing sharply lower and with both the 9 and 14 day crossing below the 40 day this is adding further pressure to sterling, and with the consequent breakout on the dollar index for the US currency cable is likely to remain under severe pressure in the foreseeable future thus presenting longer term trend trading opportunities to the downside.    With only minor economic releases in the US, other than the TIC data, expect trading to remain within a relatively tight price range.

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Currency News :

UK debt fears help to push pound lower