Wednesday October 13, 2010 - 01:56:53 GMT
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GBP USD Recovers into Close; Needs to Hold Gann Angle to Sustain Rally
The GBP USD was under pressure most of the trading session
on Tuesday, but recovered into the close to finish off the low.
The early weakness in the Sterling was caused by a government report
stating that British consumer prices were steady in September. This report did
little to clarify whether the Bank of England will undertake another round of
quantitative easing to boost a slowing economy.
Earlier in the month on October 7, the BoE refrained from
increasing QE, opting instead to continue to monitor the economic indicators.
Since Tuesdayâ€™s report was inline with expectations, nothing can be concluded
at this time regarding the central bankâ€™s next move.
The Cable recovered late in the trading session after the
U.S. Federal Reserve minutes hinted strongly that the central bank would act
sooner than previously estimated when implementing another round of
quantitative easing. This pair closed lower, but the late intraday rally gave a
slight ray of hope for the bulls.
Technically the key to sustaining the uptrend in the British
Pound is an uptrending Gann angle at 1.5816. The market has held this angle as
support since the bottom at 1.5296. This pair traded through this angle but recovered
it late. If it can regain this angle then it may have a chance to embark on
another upward swing.
According to the daily swing chart, the main trend is up
unless the last swing bottom at 1.5669 is violated. Based on the last swing
from 1.5669 to 1.6017, traders may try to establish support inside of a
retracement zone at 1.5843 to 1.5802.
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