dollars to pounds 12 Oct 2009

dollars to pounds 12 Oct 2009

Owing to national holidays in both Japan and the US the pounds to dollars was confined to trading in a relatively narrow range yesterday albeit with a bearish tone, ending the day as a narrow spread down bar with a deep lower wick.  However, before we assume that this “hammer” signals the start of any imminent reversal, it should be seen in the context of thin trading volumes and must therefore be treated with a degree of caution as the longer term outlook for the pounds to dollars pair is still bearish.  Indeed some market analysts are even suggesting that the pair could fall as low as 1.40, however, my own view is that we are likely to see an initial price level of 1.55 achieved in the short term with perhaps 1.50 as a more realistic target in the medium to long term.  With strong resistance now above the current price level and with all three moving averages pointing firmly lower there is nothing to suggest that we are likely to see any major reversal soon although we will, of course, see intra day and short term squeeze moves as the trend continues to build lower.

A relatively busy day for fundamental news on the economic calendar for both the UK and the US which started in London with the RICS House Price Balance figures which came in at 22.0%, better than the expected 15.1%.  This release is a diffusion index based on property surveyors reporting a price increase in their designated area.  Anything above 0% indicates more surveyors reported a rise in prices, anything below more reported a fall.  It is considered a leading indicator of housing inflation because surveyors have access to the most recent price data by virtue of their job.   Next the CPI data was released which came in worse than expected at 1.1% against a forecast of 1.3% indicating that the UK inflation rate has dropped more than forecast.  At the same time the RPI, Core CPI and DCLG were released and they came in at -1.4%, 1.7% and -5.6% respectively.  The effect of these numbers appears to have put Sterling under further pressure amid fears that the UK is not, in fact, emerging out of recession.  Later this afternoon we have the very aptly named MPC Member Charlie Bean who is expected to speak at the Socity of Chartered Accountants Annual Lunch in London.  It should be remembered that this is the very same Charlie Bean who admitted in August 2008 there was a financial crisis but hoped it would all be over “by Christmas”.  Indeed!!  Details of the US fundamental news can be found on the main eurodollar site.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.