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Pounds to Dollars Forex Forecast 18 Oct 2010

pounds to dollars

Pounds to Dollars 18 Oct 2010

An interesting signal on the pounds to dollars pair on the daily chart which ended on Friday as a deep shooting star candle which momentarily breached the USD1.60 price handle before closing back below at the original open of the day and forming a perfect candle as a result.  As such this gave further weight to Thursday’s candle which also exhibited an element of weakness as characterised by the shadow to the upper body, and this duly converted into a temporary pullback with the pounds to dollar pair currently trading at USD1.5871.  The issue now is whether this is a temporary reversal or the start of a longer term change in sentiment and the key is likely to be the 14 day moving average which has already provided interim support to the move lower this morning with a bounce and hold at this point.  Should this indicator subsequently be breached then we could see a deeper pullback to re-test support at the 40 day moving average currently at USD1.5646 where further support awaits.  The move lower today comes as no great surprise following the analysis of the weekly usd index chart which closed on Friday as a long leg doji, suggestive of a reversal of sentiment towards to the US dollar.  However, the longer term remains firmly bullish for the pounds to dollars pair provided we see the platforms of support outlined above coming in play, and as such, today’s pullback may only offer the US dollar temporary respite from its slide lower.

There is no significant fundamental news for either the British Pound or US dollar until tomorrow when we have building permits in the US and a speech from BOE Gov King in the evening, which is followed on Wednesday by the MPC meeting minutes coupled with PSBR data.  Of course, this week is dominated by the Spending Review in the UK when the UK government is expected to lay out its proposals for a reduction in the deficit.