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Pounds to Dollars Forecast 8 Nov 2010

pounds to dollars

Pounds to Dollars 8 Nov 2010

The pounds to dollars pair closed last week on a mildly negative tone with Friday’s candle ending as a relatively wide spread down candle as the pair pushed further into the deep price candle between USD1.60 and USD1.67.  Friday’s pullback was prompted by a minor resurgence from the US dollar on the day, a theme which has continued in early trading this morning with the pound to dollar trading lower once again, having breached the USD1.62 price point, to trade at time of writing at USD1.6123.  The question now is the extent of the present re-tracement and immediately below the current price action we have several support mechanisms in place, not least of which are the 9 and 14 day moving averages along with a deep platform at the USD1.60 price region.  Indeed any, or all of these, could provide the requisite cushion as the longer term outlook for the pounds to dollars pair still remains bullish and the first of these to be tested will be the 9 day moving average which currently sits at USD1.6064 on the daily chart.  Should this hold firm then this will signal that the longer term bullish trend remains firmly in place and, as such, we can expect to see the trend of the past few months continue unabated as the pair push through the current deep congestion and on towards a breakout at the USD1.6854 high of late 2009.

Following last week’s hectic round of fundamental news, no least of which was the QE2 announcement by the FED and the better than expected nfp numbers, this week is relatively quiet with the main highlights being manufacturing production for the UK which is forecast to remain flat, and is coupled with the trade balance figures tomorrow.  This is followed on Wednesday by the BOE inflation report for the UK whilst in the US we have the trade balance figures and weekly unemployment claims.  Thursday and Friday will, no doubt, be dominated by the G20 meetings in Seoul and with Thursday’s public holiday in the US this week’s trading could be volatile and unpredictable.