Pounds to USD

“Pounds to USD” is a popular currency pair which is traded in the foreign exchange markets. “Pounds to USD” is commonly referred to as GBP/USD in the foreign exchange market. The currency pair is commonly known as Cable among currency traders. As on close of 28-Dec-2011, the GBP/USD was at 1.5643. Over the last one year, the Pounds to USD rates have gone up by a small amount. During 2011, the exchange rate reached a high of approximately 1.6578 in May. Since then it has corrected considerably. The Pounds to USD was trading above a value of 2 in late 2007. The last 90 day range of the currency pair has been between 1.54 and 1.57.

The immediate support is between 1.54 and 1.55. The long term support is at approximately 1.44. The immediate resistance is at about 1.60 to 1.61. If the level of 1.61 is breached, the pounds to USD could go all the way up to 1.63-1.64 which is the next major resistance after 1.60. The long term resistance points for Pounds to USD are at about 1.67 to 1.68, 1.84 and 1.99.

The BOE (Bank of England) has been working quietly to bring down the value of pounds. The value above 1.60 seems to be a high point. The currency pair is expected to trade in the range of 1.54- 1.56 for quite some time ahead. The Pounds to USD could breach a value of 1.56 over the next couple of months and head towards 1.60 as per the technical charts. This is the situation assuming some economic recovery and lower volatility.

In case of higher volatility and uncertainty in the markets, the currency pair can weaken. This could cause the pound to USD value to drop below 1.54. This would signal some major weakness in the pair and the value could fall all the way up to 1.44. This corresponds to an approximate fall of 1000 pips. There is also a chart pattern of head and shoulders being formed in the long term chart with the neck at approximately 1.5467. However, traders should take cue from that as it is still early to comment on the formation of this chart pattern.