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BOE could cut rates after dollar continues to dominate against Sterling

Mon, Oct 6 2008, 12:11 GMT
by Benny Menashe

Finotec Group Inc.


Long signalShort signal
Buy a break of resistance level at 1.7875Sell a break of support level at 1.7550
GBP/USDBuy a break of resistance level at 1.7960Sell a break of support level at 1.7450
Buy a bounce at 1.7550Sell a failure of breaking the resistance 1.7875


Fundamental

The pound fell against the dollar amid speculation the Bank of England will cut interest rates this week to bolster an economy that may be in a recession. The British currency also rose to the highest level in seven months against the euro after BNP Paribas SA agreed to take control of Fortis in Belgium and Luxembourg for 14.5 billion euros ($19.7 billion) and the German government, banks and insurers agreed on a 50 billion-euro rescue for Hypo Real Estate Holding AG after an earlier bailout faltered.


Technical

The U.K. currency declined to 1.7587 and we can see the drop of 4 percent. Technically the market trend is still clear downtrend as we can see strong supply in the market, based on technical indicators like RSI, which is in a bearish direction, MACD crosses the signal line and is pointing downwards, and Bollinger gives us a selling signal by closing the candle below the middle band.


GBP/USD (Daily Chart)

The primary tendency is in a clear downtrend.

Daily


GBP/USD (4 Hour Chart)

The pair fails to break the channel upper line.

Hour


GBP/USD (Hourly Chart)
The Minor trend shows us a break of the support level.

Hourly


Resistance
1.7875
1.7960

Support
1.7550
1.7450


Archive

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FINOTEC Trading’s Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.

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