6 Oct 2009

GBP/USD Analysis:
The pound continue to struggle free EMA200 resistance for the week. It has been price range within 1.602 and 1.587, with occassion breaking high to 1.613 and low to 1.580.

Yesterday Britain's services sector grew at its strongest pace in two years in September. For the third quarter, the index averaged 54.2, the best quarterly performance since the third quarter of 2007. It caused the pound to spike high.

During the US opening, the pound fell with dues because of US ISM Non-Manufacturing PMI, hiiting above 50 at 50.9. The Dow open this week with a 100 points.

With the global economy recovering, the demand and the strength of the greenback is back.

There is no news from the US, so it all say by the reports from the UK. At 1600hrs SGT UK Halifax HPI , then at 1630hrs SGT Manufacturing Production. The Halifax HPI has risen in the last two months, and is expected to do so also this time by 0.6%. The Manufacturing Production, published at the same time, is expected to follow with a rise of 0.1%, also for the third consecutive month.

If the good news do follow, the pound still have to clear its resistance at the daily EMA200 at 1.6025. If that can be breach, the target is 1.6075, then 1.620.

Support on the other hand is found at 1.579. It will be drastic to break this support, which will means the pound will weaken towards a new low of 1.549, dampening any prospect of the pound in the long position.

Trade Suggestion: Watch the news and watch the CCI, which happens to be still indicating going long. A good catch is for the pound to clear 1.602 and do a long with small gains towards 1.62. Abandon long position if the results of the news is negative than expected. Watch and see if the support at 1.579 is broken. My suggestion is not to go short yet until the CCI indicate so.