16 Nov 2007

1. News: US CPI inflation met expectations with a rise of 0.3 pct in October from September, as strong inflation will make it harder for the Fed to cut interest rates again. Jobless claims also painted a gloomy picture for the economy. Data showed there were 339,000 new claims for the week ending Nov 10, up 20,000 from the prior week and higher than expectations for a broadly unchanged reading.On the flipside, the New York Fed's manufacturing survey for November suggested business conditions remained firm in October, with the reading dipping to 27.37 from 28.75 in October.

In its quarterly inflation report released yesterday, the Bank of England said it expects tighter credit conditions, lower house price inflation and heightened inflation to dampen consumer spending. After yesterday's dovish Bank of England inflation report, which all but confirmed that two UK interest rate cuts will be forthcoming next year, the weak figures will add to speculation that the first move could come as early as next month.

2. Stock Market: Europe market and US market both down. Admist fear of gas price and oil prices, triggered uncertainity. For this week, both UK and US has been reporting negative news indicating a weakening US and UK economy .

3. Major Currencies: Both CHF and EUR seemed to be moving side way, giving no strong clues in which direction. The JPY showed another round of strengthening process.

4. Technicals: From the daily chart, WMA5 passed EMA21 and will attempt to clear EMA55. In term of price, GBP is now hoveing near 2.0430, around EMA100. Should WMA5 clear EMA55, there will be a good tendency for GBP to reach EMA200 or at 2.0230. On the contrary, from the 1 hour chart, WMA5 may attempt to move up and pass EMA21, at 2.0520

5. Personal Assessment: Being the last day of the week and with few major news, I don't expect any reversal of the GBP to happen today. It will be good to observe how WMA5 from the daily chart perform in the case of a rebound off EMA55. GBP should go down to bring the CCI to an oversold position, and should such a case well supported by EMA5 clearing EMA55, the price could posible reach support at EMA200 or at 2.0230