GBP/USD - Daily Candle Chart Pounds To Dollars 23rd July 2009

The pounds to dollars pair are still perched below the parapet of 1.66, peering over the edge occasionally, but showing little inclination to leap over, and not helped by Bernanke’s two day testimony which provided little in the way of excitement or direction for the markets as a whole or for the pound vs dollar in particular. Yesterday’s candle was yet another in a series of dojis, on this occasion with a deep lower shadow, suggesting that we may see prices rise today, with the low of the day finding some support from the 14 day moving average. However, the significance of the moving averages is greatly reduced at present, due to the consolidation of the last few weeks, and until these begin to unwind, their effect will be limited. Until we see a break and hold above this key level, with some clear water below, then it is impossible to trade the bull side with any degree of confidence, and should the US dollar suddenly rediscover some support, it would not be a surprise to see a fall from this region, however, given the state of the dollar index this seems unlikely at present.

This morning’s fundamental news items on the economic calendar for the UK pound saw both Retail Sales and BBA mortgage approvals come in better then expected, at 1.2% vs 0.4% and 35.2 vs 32.3 respectively, and it is symptomatic of the markets at present, that neither of these good news stories generated any response from Sterling, perhaps a negative signal in itself ? The news later today in the US, centres on the weekly Unemployment Claims, and Existing Home Sales which are due out during the New York trading session, of which the first is likely to have more impact on the pound vs dollar. More details can be found on the euro to dollar site. My trading advice for today remains the same as for most of the other majors, and that is to take a wait and see approach – if we do see a break above the 1.66 level, then we can take advantage, otherwise patient is the best option!

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