Pounds to Dollars Daily Chart 5 August 2009

Pounds to Dollars Daily Chart 5 August 2009

Like many other currency pairs yesterday the pounds to dollars too decided to take a breather following the effort of breaking out of the sideways consolidation of the last 2 months, ending the session as a small doji cross.  With the breakout now complete and clear water below we are now in a position to see a strong move upwards towards our initial price target of 1.75 which should be achieved in the short to medium term.  The support below now provides an excellent platform as well as considerable downside protection to any pullback.  With all three moving averages now turning higher and with little resistance ahead until we hit the 1.75 to 1.77 region there is no reason to suppose that this will be anything other than a relatively quick run up to this level.   The British Pound was helped higher in this morning’s London session by some positive fundamental news which included manufacturing production which came in better than expected at 0.4%, reversing the recent trend of negative results, services PMI data which came in at 53.2 against a forecast of 51.9 and finally, industrial production which again reversed recent negative trends with a 0.5% result against a forecast of 0%.  In addition the UK housing market also reflected this positive tone coming in at 1.1% against a forecast of 0.7%.  The focus for this afternoon is in the US where we start with the ADP figures which generally provide an excellent foretaste of the Non Farm Payroll data due out on Friday, followed by ISM non manufacturing, factory orders, and crude oil inventories.  I have covered all of these in more detail on the eurodollar site.

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