13 Aug 2009

GBP/USD Analysis:
According to Bloomberg, The Bank of England said inflation may miss its 2 percent target as the economy endures a ``slow'' recovery and the risk that banks will limit credit. The inflation rate will drop further and economic growth may resume on an annual basis by 2010, according to forecasts released by the central bank today in London.

Claimant and Unemployment both reported slight increase, which negate the pound to a low of 1.639 yesterday.

It is still supported at daily EMA55 during Europe Trading hours. The reversal took place during US opening. Coupled with FOMC annoucement that they would be keeping rates unchanged, the stocks market rallied 120 points.

There are no major news for UK today, so all will be based on US news tonight at 2030hrs SGT. If pound continue to be above EMA55 at 1.65, it can hit back at 1.67 tonight, given a better than expected reported from the US.

Support is at 1.648, then 1.640, followed by a low of 1.62.

Resistance is at 1.662, then 1.672.

Trend: Up, most European currencies are up against the dollars. Given another round of stock rally, dollars may further weaken. A good leading indicator will be the Asian market, which most likely to rally first. Also look at how crude perform during Asian trading hours. If crude rally above 70, a indication of demand, plus a weaker dollars. Pound will stand to gain, given no major news today to disrupt it.