During the last two years, the GBP/USD currency pair was marked by moving inside a narrow trading range. In 2011 the GBP/USD currency pair fluctuated between the levels 1.5271 and 1.6746, and in 2012 the situation worsened: 1.5233 ? 1.6309. This range may seem quite wide, but it is enough to look at the pound sterling exchange rate graph for the last ten years in order to make sure that it demonstrated much stronger bullish movement and developed stronger trends before.
It is easy to make sure that the ranges of 2012 are close to major Fibo levels. Above is the level of 1.6206 ? 23.6% of retracement from the last strong GBP rally fixed in 2009, when the GBP/USD currency pair rose to the level of 1.7041 from 1.3503. From that times the pound sterling hasn?t gone beyond this rally, on the contrary the range has became narrower. Below is the level of ?1.5274, that is to say 50% of retracement from the same rally. These levels are marked with blue color on my graph. The lower level of this range is close to major Fibonacci level ? it is 23.6% of retracement from tremendous falling of the pound, which fell from many years low 2.1161 to many years low 1.3503 (November 2007 ? January 2009). This Fibo level is at 1.5311, and it is marked with green level on my graph.
On the 21st of September the GBP/USD currency pair rose to its top at the 1.6309, that is to say returned to the top level of its year?s range, and after that it started to move downward again. Such scenario, which became usual for this currency pair, was supported by the euro falling: the pound can?t play its game without turning back to look at a single currency.
Though most investors do not expect the Bank of England to cut interest rate, nevertheless the market indicates prices taking into account a program of assets buying which will take place in Spring. Besides it, according to the last official forecasts of British Government Financial Department, the country will suffer from economy regime and fight against budget deficit for many years. Fast GDP growth is not expected in the nearest few years. And economy statistics for current quarter may show its decrease.
Weak macroeconomic statistics makes the pound fall to November low, to the level of 1.5827. But there is a hope that encouraging news from the USA about further QE and financial cliff solution may support it and help to reach the level of 1.6200. If these hopes do not confirm, in January the pound may fall to the level of 1.5689 (38.2% of retracement from its rally in 2009), which played the part of whether support or resistance for the GBP/USD during the last year and a half.
Source: http://blog.forex4you.com/gbpusd-perspectives-for-december/
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