Pounds To Dollars - Daily Currency Rates 12th August 2009

Following the last three days of sharp falls on the pounds to dollars daily chart the currency pair took a breather yesterday ending the trading session with a tiny spinning top ahead of the two day FOMC meeting which is due to conclude later today.  The pound dollar pair is now perched precariously on the 40 day moving average which is almost acting as a tightrope, and in addition the support platform at this level is now fully in play.  Whilst these factors will dictate the technical picture the fundamental news on the economic calendar from the FED tonight is far more powerful and likely to produce a volatile reaction in Cable as soon as the statement hits the news wires and is digested by the broader markets.   Should the FED hint at interest rate rises sooner rather than later, then this could trigger a boost in the US Dollar with a consequent fall in the pound dollar pair.  The reason for this is that this would signal the start of improving yields for what is currently a low yielding currency.  The congestion in the USD1.64-USD1.60 price band is now key, and should this be breached then this could be the start of a longer term bearish reversal from the highs of the last few weeks.  The fundamental news today for the UK has been dominated by two items, the first of which was unemployment which rose once again to 7.8% (exceeding the forecast of 7.7%) and taking the jobless figures to a 12 year high of 2.4m.  The other item was a speech by BOE Governor Mervyn King in which he confirmed that inflation would miss its 2% target as the economy endures a very slow recovery.

You can 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.

Pounds To Dollars - Daily Candle Chart GBP/USD 29th July 2009

The fall in Cable yesterday, was less pronounced than in the euro vs dollar chart, but nevertheless the glimmer of strength exhibited by the US dollar yesterday, could be a sign of things to come, as once again the pounds to dollars pair continued to trade in this compressed range, just below the 1.66 price level. Yesterday’s down candle, in effect, created a two bar upthrust following the up candle of the day before, and if we add this to the bearish engulfing signal of Thursday last week, then this could be a further sign that the bulls are about to give up the fight, and admit defeat to the Cable bears. Naturally this is far too early to say at this stage, and with the close of yesterday finding support from the 14 day moving average, we may yet see further attempt to push higher. However as I have said many times before, only a break and hold above the 1.66 region will be good enough to confirm this picture – anything less simply WILL NOT DO! I would also urge you to watch the euro dollar – in the past these two currency pairs have often correlated extremely well at 0.90 and above – we may be seeing a resurgence in this positive correlation with the euro dollar leading the way.

I have covered all the  US fundamental news on the economic calendar for you  on the euro dollar site, whilst in the UK, the main item this morning was for mortgage approvals which came in at 48K, their highest level since April 2008, but still very weak compared with 2 to 3 years ago, and counterbalanced by total consumer lending which rose by the smallest amount on record.  The Bank said home loan approvals were 47,584 in June, up from 44,169 in May and just above analysts’ forecasts of 47,000.

You can 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.