Pounds To Dollars - Daily Candle Chart 2nd February 2009

Friday’s up bar made it five in a row for the pounds to dollars currency pair last week, with small long trades being the order of the day. However, as I kept repeating last week, the resistance level at 1.4500 will provide the key to the future direction of the gbp/usd in the short term. Indeed in this morning’s early trading, the opening price was gapped down from the close of Friday night, suggesting that this key resistance is likely to remain intact for the time being. The price action on Friday crossed above both the 9 day and 14 day averages, but we need to be careful in our trading today. My suggestion would be to stay out of the pair, until we have a confirmed signal to indicate either that the currency pair will attempt another run higher to breach the resistance, or fall back to lower levels. As it’s the start of a new month I will be looking at both the weekly and monthly charts later, in order to provide a longer term view for trading the gbp/usd pair.

I have updated the euro to dollar site with the fundamental news for the US dollar out later, which can be found by following the link. The key figures for the UK pound have already been released this morning  and are the manufacturing PMI index. As for the US and European data, this represents a survey of purchasing managers to gauge sentiment and future economic activity, and provides a snapshot of the real situation, hence the reason they are considered a leading indicator. The figures came in at 35.8 against a forecast of 34.4 and previous of 34.9, so slightly better than expected, but still showing an economy that is shrinking ( if any more evidence were needed). The UK pound recovered slightly on the news, reversing earlier losses in early trading.

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