Tuesday, 15 Sep 2009

Pound Collapses Despite Positive Inflation Figures

The Pound saw the most dramatic changes in trading today, as it plummeted against all of its major pairs. This occurred despite higher than forecast consumer price index figures at 1.6%, rather than 1.4%. There are a number of reasons for today's behavior in the forex market. The GBP firstly fell due to the lowest annual inflation since January 2005. Traders also continued the recent trend of dropping the Pound, and buying-up equities. This helped extend the bullish British equities market. The British currency also slipped as both the U.S. and the Euro-Zone published far better than forecast economic data. Comparatively this improvement was more important to currency traders than the British data.

The EUR/USD pair is currently trading higher by 15 pips at 1.4635. This comes about as the cross has been very bullish lately, and the market fails to find a clear direction. The GBP/USD cross is currently down by a staggering 150 pips at 1.6469. Much of this is owed to higher investor confidence in the U.S. currency, as the U.S. economy continues to outperform Britain. The USD/JPY pair is trading higher on the day by about 20 pips at the 90.88 level, marking a 2-day winning streak. Today's trends are likely to be extended further as late night trading kicks in. Open your positions in the majors now if you want to make some big money as the trading day continues to unfold.

EUR/GBP Impending Correction

Attention, there is some crucial technical data for the EUR/GBP 1-day chart which I strongly recommend that you study now. The chart below shows that the bullish trend for the cross is likely to be coming to an end, and that a downward correction is imminent. Point 1: The Relative Strength Index (RSI) signals that the cross is floating in the overbought territory, indicating downward pressure. Point 2: The Stochastic Slow shows a fresh bearish cross, signaling that a bearish move for the pair will happen anytime soon.