4 Mar 2010

GBP/USD Analysis:
The pound inched a notch up yesterday during US trading hours. Price range was hovering bwtween 1.500 and 1.508, before it break resistance at 1.508 and stayed above it.

Today at 2000hrs SGT, The Bank of England will announce later whether it will raise interest rates, but is expected to keep the cost of borrowing at a record low of 0.5%. The Bank is also expected to say it will not pump any more money into the economy under its quantitative easing (QE) programme, for now at least. Last month, the Bank said it was halting the programme, having spent £200bn to boost the economy. It added the programme may be extended in the future, if needed.

Before at 1700hrs, UK Halifax HPI a leading housing indicator, because rising house prices attract investors and spur industry activity. It is expected to improve from last month result.

Technically, the pound beat EMA55 at the 1 hour chart and managed to stay above it at 1.500/1.502. During US trading hours, EMA21 beat resistance and EMA100. The pound now stays above EMA100 at 1.508.

The Euro on the other hand has get rid of dispersion and look as if it is going bullish. The Euro rose to its highest level since February 17th as shorts covered positions after Greece announced additional budget cuts and tax increases in an attempt to shore up its budget and gain favors from the European Union.

Greece’s new plan to take control of its fiscal problems drew positive comments from Luxembourg’s Jean-Claude Juncker who said “Greece’s ambitious program to correct its fiscal imbalances is now credibly on track.”

It look like the pound is set in a bullish tone. Resistance is hampered at EMA200 at 1.517.

A good support is at 1.508/06 region. Felling beyond 1.506, may return the pound to its bearish sentiments and the next support is at 1.500.

Yesterday prediction: Accurate that the pound range within 1.500 and 1.508, before US trading hours to zoom past 1.508 to 1.512, before returning to 1.508.

Today Expectation: Price range within 1.506 and 1.517. Potential to retrace to 1.517 based on Fib on 19 Jan 2010 peak to 1 Mar low.