dollars to pounds

Pounds to Dollars Chart 19 Aug 2010

Much like the euro vs dollar the pounds to dollars pair is also confined to a narrow trading range and perched on a key technical indicator which in this case is the 200 day moving average.  Yesterday’s price action provided yet another classic example with the high of the day hitting resistance at the 9 day moving average above yet finding support from the 200 day moving average below.  This price action has been repeated in trading today and with the pair trading at USD1.56 at time of writing we are now awaiting the potential breakout to the downside which should see cable move lower with a degree of momentum breaking through both the 200 day and 40 day moving averages immediately below.  An initial test of USD1.5449 seems likely and should this be broken then expect to see the pair drop to test the platform at USD1.5296, followed by USD1.5241 in the short term.  In the longer term a move below USD1.50 seems likely (and beyond).

Today’s fundamental news has been dominated in the US by the dramatic fall in the Philly Fed and worse than expected jobless claims which has seen a rush into bonds and consequent fall in bond yields.  We need to see whether this translates into a bounce back for the US dollar.

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