Last week’s bullish momentum for the UK pound has spilled over into the London trading session this morning, and despite the US markets being closed in observance of Martin Luther King Jr Day, the pair have broken through the psychological 1.5900 level to trade at time of writing at 1.5925. Last week saw the GBP/USD register five straight days of gains, breaking above key resistance in the 1.5600 region and subsequently breaking through a second tier at 1.5860, with a breach of the 40 day moving average proving to be significant. The upwards momentum received a further boost later in the week with the 9 day moving average crossing above the 40 day average and with the 14 day about to follow suit this is all adding to the positive picture at present.
The longer term picture remains unchanged with the 200 day average providing a platform of support in the 1.5426 area and indeed this picture is replicated on the weekly chart with the 40 week average playing a similar role. Whilst we may see some further sterling strength in the short term in the longer term dollar strength is expected to return and from a technical perspective the 1.62 area may provide the turning point once again for cable in due course.
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