Wednesday, October 7, 2015

GBP/USD: not out of the woods until a close above 1.5245 - FXStreet

FXStreet (Guatemala) - Valeria Bednarik, chief analyst at FXStreet explained that the British Pound advanced towards a critical resistance against its American rival, with the pair trading a handful of pips below the 23.6% retracement of its latest bearish run around 1.5240 by the US close.

Key Quotes:

"In the UK, the Halifax house prices indexes showed that during the third quarter of 2015, prices surged by 2.0% compared to the previous quarter, and 8.6% compared to a year before. The numbers were below market's expectations, but continue to suggest a bubble is surging in the housing sector, as the increasing demand of new houses is the result of interest rates holding near zero in the UK."

"Fears are that, once the BOE decides to tighten its economic policy, the housing market will collapse, leading to a new crisis. In the meantime, the short term technical picture is bullish, as the 1 hour chart shows that the 20 SMA heads strongly higher below the current level, whilst the technical indicators are aiming higher after consolidating in overbought territory."

"In the 4 hours chart the price is also above a mild bullish 20 SMA, but the technical indicators lack upward momentum, hovering however, in positive territory. The pair needs to accelerate above the 1.5245 level to be able to extend its advance, towards the 1.5320 price zone, the 38.2% retracement of the same decline."
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