11 Apr 2011

GBP/USD Analysis
Last week, both the pound and the euro create new high. It seems that the debt problem has covered by what is happening in the mid east. Oil price hit $110 a barrel and indeed gave rise to inflation. But that does not explain the hike in the pound and euro. Basically the dollars has weaken.

My take on the weaken dollar is therefore temporal. The mid east crisis cause oil price and commodities prices to go high. Gold also hit above $1475. As both are related to USD, the USD was speculatively weaken to be taken advantage of.

ECB has raised the interest rate by half a percent point and that gave even more advantage for the Euro to be held against the USD. The pound also follow suite.

On the technical, the daily CCI has hit an overbought stage. It has not cut the BB to be a signal readied to short. Resistance is at 1.640 and 1.645 after it has breach the 1.640 psychological mark.

On the down side support is at 1.630 and 1.624.

Little news today, so I am expecting the pound to range between 1.640 and 1.635. If a break occur, expect the resistance and the support to be targeted.