Home » Pounds To Dollars Daily Chart » Pound Dollar Currency – 5th February 2009

Pound Dollar Currency – 5th February 2009

Pounds To Dollars - Daily Candle Chart 5th February 2009

Trading in the pounds to dollars currency pair yesterday, has given us little in the way of any signal for the short term, or indeed the medium term either, and the fundamental news out later today, will probably not help clarify matters either. Yesterday’s candle provided yet another day of indecision with a doji cross, with the upper wick having tested the resistance level at 1.4500, only to fall back in later trading. As I have said many times before, unless and until we see this region penetrated with a major breakout in prices, then the gbp vs usd will continue to move sideways, or continue it’s downward trend of the last few months. If it does break through then we could expect to see a return to 1.5500 and above, and any failure will see the pair move lower to re-test the 1.35 region again. It is also interesting to note that a pennant pattern is now being formed with lower highs and higher lows, so I am expecting a major breakout to occur in the short term, which will then provide us with some confirmation as to the future direction of the pound dollar pair. Given the news being released this morning, my suggestion would be to stay out for the time being, until we have confirmed trading signal.

The fundamental news today is of course dominated by the UK interest rate decision from the BOE with most analysts and market commentators forecasting a cut to 1.00% from the current level of 1.5%, but a word of caution – the rate decision is often priced into the market, and is often overshadowed by any MPC statement which tends to concentrate on the future. Before this release we the Halifax HPI data, again a very important release which will move the market. This is a leading indicator of the housing industry’s health( if any were needed at the moment as we all know it’s awful – just a question of degree!) and measures the change in change in the price of homes financed by HBOS. The forecast is -1.7% against a previous of -2.2%. Finally this afternoon we have the Unemployment Claims and measures the number of people who filed for unemployment insurance for the first time during the past week. If the actual comes in less than forecast then this is generally considered good for the home currency, in this case the US dollar. Although it is generally considered to be a lagging indicator, it is nevertheless considered important by traders, investors and the markets, and will move the currency when released later. The forecast is 585,000 against a previous of 588,000.

The short term outlook is sideways, the medium and long term is bearish.