gbp/usd fx 15 Oct 2009

gbp/usd fx 15 Oct 2009

The pounds to dollars pair confounded the markets yesterday with a strong surge higher, which took everyone by surprise, and ending the day with a wide spread up candle with no shadows to either top or bottom. This explosive move back deep into the recent heavy congestion area, breached the  40 day moving average, having initially found some good support from the 9 and 14 day averages.  One of the reasons offered for the strong surge are the comments from BOE policymakers that the QE programme was “working”   With such a strong move, we must assume that this has some foundation, and given the fact that we are now once again deep into the congestion price region once again, we must also now consider the possibility of further sideways price action in the short term. No doubt this renewed strength for the UK pound will have upset the Bank of England and in particular Governor Mervyn King, who sparked the initial sharp sell off in Sterling with his comments that a weak pound would be ‘helpful’ to the UK economy. Clearly the markets decided to ignore his words and advice for the time being and simply reacted to the QE comments.  However, with the pounds to dollars pair closing yesterday at 1.639, it will be intersting to see whether this move has sufficient momentum to break above the upper resistance level at 1.65 – this seems unlikley to me, but given yesterday’s surge it would not be a great surprise.

There are no fundamental news items on the economic calendar for Sterling and all the items relating to the US dollar are covered on the main eurodollar site.  You can, however, keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.