Pounds To Dollars - GBP/USD Daily Chart

Pounds To Dollars - GBP/USD Daily Chart

Yesterday was another strong day for the pounds to dollars pair, ending the trading session with a wide spread up candle which just failed to breach the upper resistance level of the recent consolidation, but ending well above all three moving averages once again. UK sterling seems to have fully recovered from the knockout blow it received from Mervyn King, whose comments that a weak pound would be helpful to the UK economy at this stage, sent the pair tumbling as a result. Technically of course we are now in a very similar position to that of the last few months, as we now wait for a break and hold above the 1.67 price level, which would then confirm that we are likely to see the current rally maintained. If this does occur, then the bull cross of yesterday with the 9 day moving average crossing the 40 day moving average would certainly add weight to this view, and should this occur, the the previous top at 1.70 becomes an achievable target once again. With Cable now benefiting once again from the continued US dollar weakness which remains chronic and long term, then any move above here could signal a sustained and prolonged rally higher, possibly even as far as the 2.0 level of last year. The only caveat to this would be if the FED decide to raise interest rates sooner rather than later, but this seems very unlikely at present.

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