Sterling weakened from yesterdays level of £/$1.61 trading down to £/$1.59 ahead of today's anticipated rate cut which earlier analysis suggested could be as much as 1%. However the Pound is extremely oversold following its 25% crash from the high of £/$2.11 all the way to £/$1.53, this suggests that even a 1% cut would result in limited downside action until sterling has managed to work out its oversold state.

Chart courtesy of stockcharts.com

Immediate short-term support levels are at £/$ 1.57 and £/$ 1.56. Immediate trend objectives are for a corrective rally to above £/$1.70 , to be followed by a downside test of £/$1.53 on break of which Sterling would target the longer term objective of £/$1.37

For forecasts and deeper analysis of for UK economy, inflation, and the much in demand UK house prices. Subscribe to our always free newsletter to get the scheduled analysis in your inbox on the day of publication.

By Nadeem Walayat
http://www.marketoracle.co.uk

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 150 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Attention Editors and Publishers! - You have permission to republish THIS article. Republished articles must include attribution to the author and links back to the http://www.marketoracle.co.uk . Please send an email to republish@marketoracle.co.uk, to include a link to the published article.

Nadeem Walayat Archive

Comments

Dr Khan
17 Nov 08, 04:44

Do you still expect a rebound to £/$1.70 (or less) before a downside trend to £/$1.37

Based on your article of 6 Nov, specifically the "immediate trend objectives are for a corrective rally to above £/$1.70" Admittedly this is prior to 1.5% rate cut but do you still hold the view we are due for a rebound from where we are before we "target the longer term objective of £/$1.37"

JP recent report indicates trending to low's of £/$1.28.

Should we expect a technical correction to 1.60's before sterling plunges downwards?

Cheers

Nadeem_Walayat
17 Nov 08, 09:07

British Pound Oversold

The British Pound has been extremely oversold for 2 weeks now and the direct reason is the panic 1.5% rate cut that no one could have forseen, the consensus was forecasting a 0.5% cut, my forecast was for a 1% cut.

The Pound should rally towards £/$ 1.60 to unwind the extreme oversold state into the end of November, i.e. I expect to Pound to be higher at the end of November than where it is today targetting £/$1.60 with the upper resistance at £/$ 1.65.

Offcourse in the meantime should the government announce another panic measure then that would hit sterling again.

£/$ 1.37 is the longer term objective, and represents multi-decade support below which lies parity to the dollar, as the article of 13th Nov covered.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.