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GBPUSD to Continue Its Southern Journey Ahead of the BoE Rate Decision

GBPUSD to Continue Its Southern Journey Ahead of the BoE Rate Decision

2011-02-09 16:30:00
Michael Wright, Currency Analyst
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Potential 24 Hour Setups

Currency Pair

Potential Target

Pivot Support

Pivot Resistance

Short GBPUUSD

1.6060

1.605

1.615

*Trade updates during the course of the day will be provided through our real time news page.

Review of Price Action on the Previous Day’s Trade

Currency

Entry

Potential Target

Close

Short AUDUSD

1.012

1.0079

1.0098

*Note: EURUSD short is from the last updated report on Thursday

After testing the upper bounds of its descending channel, the GBPUSD is back under pressure and now looks poised to continue its southern journey ahead of the Bank of England interest rate decision. Indeed, the central bank will likely hold rates at 0.50 percent in February as expectations of weaker growth in 2011 discourage policy makers from tightening monetary policy. As of late, traders are pricing in a 15 percent chance that the BoE will hike rates twenty five basis points tomorrow, according to the Credit Suisse overnight index swaps. With no expected change in policy, remain short so long as the descending channel remains intact. As price action moves in our favor, make sure to place a trailing stop in order to lock in some profits and avoid any unforeseen losses.

GBPUSD 1 Hour Chart

Intraday_Trading_02.09.11_body_gbpusd1.png, GBPUSD to Continue Its Southern Journey Ahead of the BoE Rate Decision

Charts Created Using FXCM’s Strategy Trader

Close: 1.6094

Retail positioning relates to our speculative sentiment index which illustrates where traders are at in the market. The larger the retail positioning is within the highlighted area, the more likely it is that longs exceed shorts or vice versa. We will look to use this indicator in conjunction with other technical developments to dictate price action over the next 24 hours.

Every day at 16:00 GMT, we analyze potential 24 hour trade set ups. The trade is no longer valid if it is not triggered by 16:00 GMT the next day. Good luck trading!

Written by Michael Wright, Currency Analyst

To Receive Future Articles by Email, please contact me at instructor@dailyfx.com

Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, Intraday Trading, and Forex Trading Weekly Forecast

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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