GBPUSD Analysis:
The dollar gained on yesterday as investors trimmed short positions after euro zone economic policymakers followed U.S. Federal Reserve Ben Bernanke in commenting about the merits of a strong dollar.
But dealers said the greenback's rebound will likely limited and that the trend of a long-term dollar decline has not changed.
The GBP USD closed lower after making a valid attempt to turn higher for the day. The uptrend has been strong in this currency lately as the bulls seem to have control over the market despite attempts by Bank of England Governor King recently to talk this currency lower. It looks as if traders are beginning to believe that the economy has bottomed and that the BoE is getting ready to reduce quantitative easing.
Watch out for MPC annoucement at 1630hrs SGT.
Right now the pound look to trade within 1.683 and 1.676, giving raise to a potential breakout. Shoudl it break 1.683, the next resistance is at 1.698/1.704 region. If it break 1.676, support is at 1.668, then 1.664.
Trade Plan suggestion: A long is still favoured. But where will be the entry point? There are 3 points, one at breakout at 1.684, second is at support at 1.676 and the third is at support at 1.668. Play according to your level of comfort, and take profit at the next resistance/ support level.
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