Pounds to USD 7 Oct 2009

Pounds to USD 7 Oct 2009

Very little to add to my market analysis from yesterday for the pounds to dollars currency pair, as it continues to track sideways in the 1.59 to 1.60 price channel, as we wait for the interest rate decision from the Bank of England later in the morning, with yesterday’s candle having a slight bullish bias, indicated by the lower shadow to the body of the candle. With interest rate decisions both in the UK and Europe, neither are likley to provide any surprises to the market, either in the decision itself which will be to keep rates on hold, or indeed in the accompanying statements issued by the centrak banks.  Cable remains waterlogged following Mervyn Kings previous commnets suggesting that the UK economy would benefit from a weaker pound ( I think ‘helpful’) was the exact phrase he used, and whilst the markets generally have little memory, in this case the comments seem to have resonated, with the UK pound continuing to suffer as a result. Technically the pounds to dollars pair remain below the key resistance level at 1.61, and until this is breached in any significant way then the bearish sentiment will remain in the ascendancy for the time being. With both the 14 day and 40 day moving averages pointing sharply lower, the only bright spot was the break and hold above the 9 day moving average in yesterday’s trading session. In the short term we may see a move higher given the platform now being built, but longer term the trend remains bearish with a break to 1.55 the next likely target for the pounds to dollars pair.

The only other item of fundamental news for Sterling this morning was the CB (Conference Board) Leading Index and is a composite of 7 economic indicators.  The index is designed to predict the direction of the economy but given that the indicators used to calculate the index have already been released its effect is somewhat muted.

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