27 May 2011

GBP/USD Analysis

Britain’s pound appreciated to the highest in two weeks versus the dollar after a report showed the U.S. economy grew less than economists forecast.

In the US, Personal Consumption Expenditures Similar to Consumer Price Index measuring changes in prices of consumer supplies and services is expected to reduce by 0.1% to 0.5%, and to 1.8% on the Price Index. Meanwhile the Core Personal Consumption is expected to rise by 1% both here and on the Price Index.

Both news weaken the dollar and strengthen the pound in what is seen as a reversal from the bearish trend for the pound which lasted for 2 weeks.

The pound rebounded from support at 1.608 and spiked towards resistance at 1.636.

On technical analysis, support now lies at 1.636 and next at 1.630. Resistance now stands at 1.646.

With no UK news today and a likely weaker US spending, inflation and housing news, the pound may attempt the resistance line.

CCI continues to be out of the BB lines. There is no sign of reversal, ony signs of the pound being overbought.