GBP/USD Analysis:
The pound hit its 1.6275 support line and rebound back to 1.646, 20 pips below 1.648 which is yesterday high. This form a hammer.
As expected UK Construction PMI posted at 46.2 was worse than expected. The rebound was caused by a 2100hrs SGT news on UK Halifax HPI (which was not schedule during yesterday morning annlysis).
Today at 0800hrs SGT UK will have its confidence report, which will set the direction for the pound till 1730hrs SGT before the UK Services PMI.
The pound is generally weak because of the amount of debt over GDP, which is more than 10%, more than the US. Therefore as part of analysis, all eye FOMC this Thursday at 0315hrs SGT and MPC meeting this Thursday. Its about monetary policy.
Now that the US has its feet out of the recession, will Fed unplug the trillion of dollars plan and raise interest rates? If that is so, the dollars will strengthen and then what will the UK government do to the pound?
Today I am expecting a trading range of between 1.65 and 1.6220. Resistance at 1.660 and support at 1.6220.
Trading plan suggestion: To be conservative because of any major breakout that could happen on Thursday, trade at resistance and support line. Remember to little gains and let go when it break out of resistance and support lines.
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