Pound dollar exchange rate (GBP/USD): Break of the resistance at 1.6474 is needed
- Written by: Gary Howes
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The pound sterling to US dollar exchange rate (GBP/USD) is trading a quarter of a percent in the red at 1.6379 by late morning in London.
Helping push GBP/USD lower today was a poor reading from the December Services PMI.
(Note, the above are spot market quotes, your bank will affix a spread at their discretion. An independent FX provider will however guarantee to undercut your bank's offer, thus delivering more currency. Please find out more here.).
2014 has not been kind to the pound to US dollar exchange rate, and for the medium-term uptrend to reassert itself we need to see key resistance levels broken.
Luc Luyet at MIG Bank tells us where these levels are:
"GBP/USD has declined sharply after posting new highs. Supports can be found at 1.6305 and 1.6220. A break of the resistance at 1.6474 is needed to improve the short-term technical structure.
"The break of the major resistance area between 1.6381 and 1.6466 favours a further long-term rise towards the strong resistance at 1.7043 (05/08/2009 high). However, monitor the recent bearish reversal near the resistance at
1.6618 (19/08/2011 high).
"A break of the support at 1.6220 would negate the positive outlook implied by the recent new highs. Another key resistance lies at 1.6747 (28/04/2011 high)."
Politics also on the radar for GBP/USD
There are other issues at play which have conspired to dampen the tone on GBP/USD.
"Sterling dropped against the US dollar ahead of the Services PMI data. Chancellor of the Exchequer George Osborne stated that spending cuts are needed to fund tax reductions which also dampened demand for the pound. This has helped fuel speculation that BoE Gov. Carney may adjust forward guidance," says Sasha Nugent at Caxton FX.
Market players are also said to be eagerly awaiting the results of tonight's Fed Chairman Nomination.
The US Senate will vote to either pass or reject Janet Yellen to take the Fed's reins for the term of Feb 2014 - Jan 2018.
We also have US non-manufacturing PMI data being released at 15:00 today, this could help the dollar maintain it's recent string of strength against the pound and sideways trading is expected.
