Yet another currency pair which are trending sideways in a consolidation, which in the case of the $uros to poundsr is now forming a pennant in the weekly candle chart, with the point around the 0.9000 region. The last five weeks have seen virtually no move from this area making the currency pair almost impossible to trade using simple buy and sell positions in the spot market, and my advice for the retail trader remains the same as before – stay out of the market until we see a breakout from the current range. For options traders, the straddle would be the ideal trade, but with long term options of at least three months, as anything shorter may suffer with time erosion wasting the option before the breakout occurs. My own view is that we will see a break lower in due course, with the bearish engulfing signal of five weeks ago reinforcing this view and my long term target is for the pair to return to the 0.7800 region in the next few months, as I believe the euro is over bought against the UK pound.

The main $undamental news this morning was in the UK with the release of the PMI manufacturing data, an index based on a survey of purchasing managers in a variety of manufacturing industries, with a figure above 50 indicating an economy in expansion and below this number an economy in contraction. It is generally consider to be a leading indicator with the data coming in marginally below forecast of 34.9 at 34.7. This afternoon sees similar figures released in the US and all the fundamental news is covered for you either in the economic calendar or on the TV news channel which provides the latest currency news. Alternatively check with your ECN broker.

The short term outlook is sideways, the medium to long term is bearish.