GBP/USD - Daily Candle Chart 2nd April 2009

GBP/USD - Daily Candle Chart 2nd April 2009

The British Pound has finally found some self-esteem as it continues to forge ahead against the US dollar in this morning’s trading and as outlined in yesterday’s commentary there are two reasons for this based on our technical analysis.  First the monthly chart is now showing a strong bullish reversal with a mixture of long legged doji candles and this week accompanied by a huge volume spike which you can see if you are using an ECN broker who displays tick volume suggesting that there has been massive buying into the market.   The second driver has been the hammer formed on Monday creating the platform for this current move, and for this to be sustained we now need to see prices break above several levels of resistance, the first of which is in the 1.47 – 1.50 region and if this is broken then we need to see a break higher to test 1.54 and above.  Should this occur in the next few weeks then the pound dollar will finally have broken out from the downward sloping wedge of the past few months and with the double bottom clearly formed in the last quarter we could now be seeing the first tentative signs of a longer term bull move in the pounds to dollar pair.

The fundamental news in the economic calendar for the British Pound has come as a pleasant surprise with 2 sets of figures both beating the forecast.  In the first case the Nationwide HPI data came in +0.9% against a forecast of -1.5% with house prices showing a slight and unexpected increase in March.  This was followed shortly afterwards by the construction PMI data which exceeded the forecast of 27.6 by coming in at 30.9 and both provided an uplift to the pound.  The two items of US data are covered in my eurodollar site.

My trading suggestion for today is to look for long positions and adding to any if the price breaks above 1.4722 with a stop at 1.4371.

In the meantime you can keep up to date with all the latest currency news, fundamental news and live currency charts simply by following the appropriate links.