Pounds To Dollars - Daily Currency Chart 21st September 2009

Pounds To Dollars - Daily Currency Chart 21st September 2009

Forex Technical Analysis – Pounds to Dollars

The pounds to dollars currency pair, ended the week with a bearish tone once again, closing the trading session with a wide spread down bar which finished well below all three moving averages once again as the pair continue to oscillate between the 1.67 and 1.60 price channel. At some point one of these support or resistance levels will be breached with a breakout, which will then set the tone for the remainder of the year, and it is interesting to note that despite the continued and remorseless US dollar weakness, Cable seems to have problems of it’s own, and has failed to benefit unlike the euro vs dollar which has broken higher. Indeed the relationship between the gbp/usd and eur/usd pair used to be one of positive and close correlation, and which many currency traders used to hedge or balance against other positions, however in the last few weeks this correlation has failed with the pounds to dollars pair falling whilst the euro vs dollar is rising. The primary reason for this current disconnect has been the response to comments from the BOE Governor regarding future UK monetary policy with the UK pound falling as a result.

From a technical perspective, until we see a break either above or below the channel outlined above, then we may well see a further period of sideways consolidation as we wait for the inevitable break out, which may come later this week with the FOMC monthly interest rate decision and associated statement. The key will be the statement itself as interest rates are widely forecast to remain on hold at 0.25%, but it will be the tone of the FED, and in particular any response to the continued US dollar weakness that will introduce any volatility to the market. With many currency analysts now suggesting that the US dollar is over sold, this week could see the breakout that will trigger a new trend for the pounds to dollars currency pair.

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