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Euro to Pound Chart 16 Oct 2009

Yesterday’s renewed interest in Sterling as a result of comments from the BOE that QE was “working” had a dramatic effect for the $uros to poundsr, as the heavy buying of the UK currency sparked a big sell off in the currency pair, which ended the trading session with a wide spread down bar which breached both the 9 and 14 day moving averages in one fell swoop, propelling the pair almost 200 pips lower in the day. However, following the shooting star candle of Tuesday, this move was no great surprise techniccally, the only surprise being the depth of the move, and we now need to see whether the minor resistance in place at the 0.91 price handle will be sufficient to prevent any further falls today, or whether we need to see the deeper resistance at lower levels put the brake on once again. In addition the 40 day moving average will also be key to this move, and could provide the necessary support in due course. As always after such a sharp move, it is easy to panic and assume that the trend has ended, however, in this case, and given the BOE’s earlier view of Sterling (happy to see a weak Pound), the markets may simply see this as a buying opportunity, with a consequent rise in due course.

With no items of $undamental newsthe economic calendar for the UK and only second tier releases for Europe – Italian Trade Balance which came in worse than expected at -1.35b and European version (minus France & Germany) which too came in below expectation at 1.0b the pair may just simply continue to drift lower given the depth of the recent fall.  Meantime 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.