Pounds to Dollars - 18th February 2009 Daily Chart

Pounds to Dollars - 18th February 2009 Daily Chart

Yesterday’s candle has given us little in the way of a clue for today, ending much the same as for Friday, and I’m afraid for today I would suggest a wait and see approach. The rally of the last two weeks seems over, and the expectation is for the pound to dollar price to fall back, possibly to re-test support at 1.4000 and if this is successful we could see the currency pair back to the 1.3500 level in the medium term. The moving averages have all closed, and with the daily candles now below all three, and with a failed attempt to move higher on Monday adding weight, the tone is very bearish. So as I said earlier I would suggest you wait until we have a clear signal in the daily charts before trading.

The news this morning seems to have had little effect on the pound dollar, with the split of the BOE committee coming in as expected at 0 9 0 which was the forecast, so no great surprises. The other news this morning was the CBI Industrial Order Expectations which tend to have a muted impact anyway as open of the lesser indicators, and these came in at -56 against a forecast of -45. A figure above 0 indicates increasing order volume is expected, below indicates expectations are for lower volume and it is generally considered to be a leading indicator of economic health – businesses react quickly to market conditions, and changes in their expectations can be an early signal of future economic activity such as spending, hiring, and investment. Given the current gloom in the markets, the numbers had little impact or came as any great surprise with a further decline forecast. The survey is based on around 500 manufacturers which asks respondents to rate the relative level of order volume expected during the next 3 months. The fundamentals for the US dollar are detailed on the euro to dollar site.

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