Thursday November 11, 2010 - 03:31:44 GMT
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British Pound Posts Strong Rally after Testing 50% Level
The British Pound rebounded against the Dollar after
recovering from a sharp sell-off on Tuesday into a key 50% price level at
1.5974. Additional support was provided by an uptrending Gann angle at 1.5950.
This angle moves up to 1.5970 on Thursday, making 1.5974 to
1.5970 a major support cluster. A break below this set-up is likely to attract
selling pressure that could fuel a decline into the Fibonacci level at 1.5987.
On the upside, the market rallied into the retracement zone
at 1.6125 to 1.6165 created by the short-term range of 1.6298 to 1.5951.
The catalyst behind todayâ€™s rally was the Bank of Englandâ€™s
assessment of the U.K.
inflation situation. The Sterling
began to rally early in the session after the Bank of England said inflation
may continue to accelerate above its 2 percent target, reducing the chances
that the central bank will reignite asset purchases.
Based on todayâ€™s trading action, it looks as if the BoEâ€™s
â€śwait and seeâ€ť monetary policy approach is not likely to change until the
central bank gets a chance to assess further economic releases. This may mean
continued strength in the Cable especially if the Euro remains under pressure
because of sovereign debt concerns and the U.S. economy continues to falter.
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