6 Aug 2009

GU Analysis: Look out for BoE Statement 1900hrsSGT. Cable met resistance at 1.704 yesterday and support at 1.690. BoE report may break the pound in either direction.

Two reports from BoE will be important. One is the interest rate, which may be kept constant at 0.5%. The other is whether BoE decision to increase or decrease bond buy-back.

Coupled with all the recent better than expected UK data releases, a stop in the buy-back will give signs of that the financial plan work.

On the US side, ADP or Non-Farm Employment Change fall below expectation. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity. That stall the pound in its advance yesterday.

For a trader that based solely on technicals, CCI pointed to a overbought situation and is showing the movement down. Pound could retraced to support at 1.690, then 1.6780, then 1.6705.

On the up side, expect the pound to clear 1.704 to reached 1.750, using Fib retracement to estimate. 1.82 is the target.

Trend: Afternoon expecting a down, before a possible volatile movement up towards 1.7