26 Feb 2010

GBP/USD Analysis:
News from Euro and UK are enough to see why the weakness in these currencies.

In the UK, "London Capital profit falls, not to pay final dividend", Fears mounted Thursday that Britain may not have emerged from recession at the end of 2009 after all, as statistics showed a dramatic fall in business investment in the last three months of the year.

In Euro, EUR/USD has priced in the possibility of the unthinkable: the default of a member of the euro zone.

From the daily chart pound has broken below key support in the 1.5350 price region. It went as low as 1.5200, only to recover back to 1.526 this morning, given the uneasiness about the economy.

Global markets retreated earlier this month because traders were worried about Greece's debt problems. The market's drop early in the week, a rebound and the latest slide signal that investors are waiting for clearer information on the direction of the economy.

Yesterday analysis: Indeed, "I am not expecting the pound to do well today and may test new low at 1.535/30 region.".

Today expectation: Its Friday and everyone will be waiting for some outcome in the Euro zone on Greece. Any news will sent the pound in either direction. There are UK news on Consumer Confidence at 0800 SGT and UK Nationwide HPI at 1500hrs SGT. This are signs of the UK economy.

Support now lies at 1.505 and it is only about 200 pips which is quick possible for pound to test it today.

On the up side, the pound did its first Fib retrecement to 1.526 this morning. The next is at 1.530 (EMA21) and 1.533 (EMA55).

My expectation: Watch and if possible catch the wave to its next suport or resistance line.