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Pound stalls at $1.6150
Sterling edged higher in overnight trading but failed to retake yesterday’s high of $1.6182.
Yesterday the US was hot and cold in terms of its economic announcements. An unexpected drop in durable goods (-1.3% vs +0.4% expected) gave sterling the upper hand, but when the conference board consumer confidence came in at 94.5 (a seven year high) the pound’s gains were nearly all but lost.
UK mortgage approvals are due out at this morning, and we are expecting a decline of 1000 to 63,000 in September. Tighter lending from banks and fears of a property bubble have cooled the mortgage market, and a weak report could prompt selling of sterling.
Today’s session will be all about the FOMC at 6pm. The update is expected to bring an end to QE3, but traders will be sifting through the statement to try and ascertain when interest rates will rise. The Federal Reserve has bandied around the phrase ‘considerable time’ when it comes to how long interest rates will remain low for. I suspect we will see much of the same tonight, which may nudge GBP/USD higher.
The 200-hour MA of $1.6098 is providing support and if the level is breeched the support mark is $1.6020. To the upside, the 50-day moving average of $1.6182 (yesterday’s high) is acting as resistance, and if this is taken out then the next level to watch for is $1.6220.