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Pound declines versus the dollar

After touching $1.68 yesterday, sterling has dropped back, hit by weaker UK construction output figures.

All trading involves risk. Losses can exceed deposits.

Yesterday’s Bank of England decision was one of the dampest of damp squibs – i.e. no change for the 33rd successive meeting. Construction output for February was released this morning, and saw a decline of 2.8% versus the expected drop of 1.3%.

Having seen $1.68, however briefly, the presumption is that we will eventually witness further gains in GBP/USD. However, the currency was sharply overbought earlier in the week, and we’re now witnessing the unwinding of that move.

In the short term I expect to see support enter the fray around $1.6720, with the rising 100-hour moving average hovering here as well. The 200-hour is also continuing to rise, which would suggest support close to $1.67 if there is a sustained bout of risk aversion in the coming week.

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