Against the backdrop of tomorrow’s budget which is likely to reveal a frightening black hole in the public finances of UK plc it came as no surprise to see the sell off in the British Pound across a variety of currency pairs including the euros to pounds, resulting in a wide spread up bar which closed marginally below the 9 day moving average.  More interestingly we now have a sequence of 4 candles all of which have precisely the same low on each day, just above the 0.8800 price point, suggesting that we could be seeing the start of a re-basing for the pair for a possible move in the short term before continuing lower in due course.  Any analysis for the euros to pounds pair is far from straightforward as we are now trading in a range of heavy consolidation created during February and the early part of March and for any sustained move higher we will need to see a break back above the 0.90 price level and certainly supported by the 9 and 14 day moving averages.

There have been a number of important fundamental news items on the economic calendar this morning for the British Pound, not least the confirmation that deflation has now taken hold in the UK with the release of the RPI figures which although coming in at -0.4% against a target of -0.6%, marginally better than expected, it  is the first time in five decades that this has occurred.  The CPI data released at the same time came in on target at 2.9% and taken together with tomorrow’s budget my trading suggestion is to take a wait and see approach until all these items have been absorbed by the market.  Longer term we are still looking at a bearish trend but in the short term there may be opportunities to take some pips on the long side.  News items for the euro are covered in the euro dollar site.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.