GBP in USD Daily Forex Analysis 23 Sep 2009

GBP in USD Daily Forex Analysis 23 Sep 2009

Daily Forex Analysis : Dollars to GBP

The pounds to dollars pair continued to trade sideways once again yesterday, ending the trading session with a wide spread up bar, which confirmed the hammer signal of Monday, and reinforced the technical picture further, by once again failing to break to the downside, and instead reversing higher once again. This trading channel is now well established and the longer this price action continues, then the more dramatic will be the breakout when it occurs. With the upper boundary at 1.6650 and the lower level at 1.6000, at some point one of these levels will be breached and the trend will then be set for the pounds to dollars pair in the medium term. Cable is one of the few currency pairs that has failed to benefit from the sustained US dollar weakness, and unlike the euro vs dollar remains waterlogged at this level. However today’s FOMC rate decision and announcement may provide the trigger that the pair require in order to break from the current malaise, and any indication that interest rates are likely to rise sooner rather than later could be seen as dollar positive with a consequent fall in the pounds to dollars pair. Conversely, of course, the FED may say nothing, and simply hold rates at their current level of 0.25% which is almost guaranteed, and as such leaving the US dollar as the favoured currency for the carry trade as a result, a role that was originally played by the Japanese yen. With the markets waiting for the news, we are likley to see yet another day of sideways trading, until the statement is released.  Meanwhile into the debate surrounding Sterling has weighed in the mighty Goldman Sachs who are advising clients to build up Sterling reserves – interesting!

The only other items of fundamental news on the economic calendar for today for the pounds to dollars pair are in the UK with the MPC minutes from the last meeting with the voting split widely expected to show a 0-0-9 decision in favour of keeping UK rates on hold, with the other news being the BBA mortgage approvals forecast to show a modest rise from 38.2 to 41.1 this time.