- The long-term trend (weekly chart) in GBP / USD is down
- Prices broke under the neckline of the Head-Shoulders pattern in the daily chary
- Prices moved sideways since 28.09.09
The GBP/USD prices stabilised in the 1.5850 - 1.6130 range after the neckline of the Head-Shoulders pattern was broken downwards. The pair stayed in that range since 28.09.09, however, a breakout is possible today.
GBP/USD, weekly
GBP/USD, daily
The Bank of England Monetary Policy Committee Decision on interest rates and the Asset Purchasing Target are due at 11.00 GMT today. This event can act as a catalyst and move the pair over 100 points in either direction within the first hour of trading. In the past a further extension into the initial direction was often recorded. By trading with the trend profitable trades were feasible in the past.
In case the pair breaks out of the 1.5850 - 1.6130 range further potential opens up over the next week. If the 1.6130 resistance falls, upward potential to 1.6400 opens up. In case of a break below the support at 1.5850 a fall 1.53 is possible.
Recent UK fundamentals and the comments by BOE Governor Mervyn King in regards to the economic advantages of a weak GBP might suggest a surprise to the downsize. E.g. by increasing the target for the asset purchasing scheme. Of cause that's pure speculation.
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