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Pounds to Dollars Forex Forecast 29 Oct 2010

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Pounds to Dollars 29 Oct 2010

The pounds to dollars pair surged higher in yesterday’s trading session ending as a wide spread up candle which closed above all four moving averages once again and ended the forex trading session at USD1.5961, just shy of the USD1.60 psychological level.  The key to the performance for cable over the last few days has been the platform of support provided by the 40 day moving average, which throughout the recent short term re-tracement remained unbroken and, as such, gave us a strong signal that the currency pair was likely to recover following the sell off last week.  The question now is whether we will see cable pick up momentum to break above the high of mid October at USD1.6107 and following today’s advance GDP figures for the US this now seems increasingly likely as the prospect of a rollout of the FED QE2 programme seems certain, based on today’s number.  Should this be the case then we can expect to see further sustained weakness in the US dollar with both the euro and the pound benefitting, along with equities and commodities which should both continue to rise.  For this positive technical picture to be completed we now need to see the 9 day moving average turn higher and cross above the 14 day average once again, and these two short term moving averages will then provide the requisite platform for a sustained breakout beyond the current price point.