Dollars to Pounds - GBP/USD Daily Chart 10th August 2009

Dollars to Pounds - GBP/USD Daily Chart 10th August 2009

Last week’s decision by the BOE to increase its scope of buying bonds beyond the original £150bn sent shock-waves through the pounds to dollar pair which had barely recovered before the pair was hit by a bounce in the US Dollar following the NFP data.  Friday’s wide spread down bar merely served to reinforce Thursday’s bearish engulfing candle, closing the session marginally below the 9 day moving average but still well above the bulk of the support platform in place at the USD1.65+ handle.  Whilst the breakout still remains intact this bout of bearishness in the British Pound came as a nasty shock to those holding long positions following the breakout (myself included) but before we become too despondent any reversal lower will still take a degree of force and momentum.  In the meantime the British Pound is looking decidedly peaky as a glance at the weekly chart would suggest that we are in for a short term reversal given the shooting star candle sitting atop the recent rally.  Despite this relatively strong signal my trading suggestion is to stand aside and wait for any bounce off the support platform below.  There are no items of fundamental news on the economic calendar for either Sterling or the US Dollar and we must wait for the FOMC meeting and BOE inflation report on Wednesday for any clues as to the future direction for this pair.

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