23 Feb 2010

GBP/USD Analysis:
Yesterday: The pound as predicted keep within trading range of 1.55 and 1.53. It did not go below 1.54 but instead attempt to break 1.552, which is EMA100 on the 1 hour chart.

Today: Both French and Germany are expected to report consumer spending and business climate respectively. Numbers are expected to fall. Greece still doesn’t have a backstop plan and there’s a lack of concrete details coming from Germany and France.

UK MPC is expected to report on inflation. Inflation is up in the UK, however the Bank of England is ignoring this fact on the basis that they believe it to only be temporary. Expect more of this talk and that they will keep rates steady for some time.

There has been no change in the fundamentals. The budget deficit, weak economy and lack of confidence in the Bank of England are still the catalysts behind the weakness in the British Pound.

In the absence of news, the pound did an attempt on EMA100 on the 1 hour chart. It hit high at 1.552 and current WMA5 hovers between EMA100 and EMA55/EMA21.

Support is therefore at 1.548/1.546, while resistance is at 1.550/1.552. If a breakout occur at 1.552, then it will attempt 1.555.

With the news coming in the afternoon, the adverse effect on any negative reports is for the pound to attemp 1.53.