Finotec News Archive - September 06 2007
The pound advanced against the dollar and the euro
GBP/USDAnthony Boyajian 
06 September 2007
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The Bank of England may leave its benchmark interest rate unchanged today as policy makers try to prevent an increase in corporate borrowing costs from hurting growth, a survey of economists showed.
The Monetary Policy Committee, led by Governor Mervyn King, will keep the bank rate at 5.75 percent, according to all 60 economists surveyed by Bloomberg News. The bank will announce the decision at noon in London.
The central bank yesterday took its first steps to curb U.K. money-market rates, which have climbed to the highest since 1998, following the collapse of the U.S. subprime mortgage market. The turmoil has clouded the economic outlook less than a month after the bank signaled that five rate increases in the past year may not be enough to contain inflation.
``We'd be very surprised to see another rate hike,'' said Steven Bell, chief economist at hedge fund GLC Ltd. in London and a former U.K. Treasury official. ``Though recent data has been strong, the effects of past tightening, the money-market tightening and the turmoil itself will slow growth and keep inflation under control.''
The Bank of England yesterday offered to provide extra money next week to reduce ``unusually high'' overnight interest rates. The European Central Bank said it is ``closely monitoring the situation'' and it ``stands ready to contribute to orderly conditions'' as soon as today.
The ECB will probably keep its benchmark rate at 4 percent today, all 56 economists surveyed by Bloomberg News predict. The U.S. Federal Reserve left its rate at 5.25 percent on Aug. 7.
The following technical analysis gives us a detailed lookout on what is expected to happen to GBP/USD.
The buying point is at 2.0228; based on a break out of the Standard Error Channel middle line.
Fibonacci 61.8% will be the Take Profit at 2.0306
- Fibonacci 23.6% is the Stop Loss at 2.0146
The selling point is at 2.0463; based on a failure swing formation.
- Fibonacci 38.2% is the Take Profit at 2.0207
- Fibonacci 23.6% is the Stop loss at 2.0609
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of the two moving averages below the zero line, the shorter term moving average is faster than the long term and is pointing upward. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI, we can determine that the market is in an uptrend.
The momentum oscillator is very important to understand the strength of the market and as we see on the graph; it break the zero line upwards. The Stochastic oscillator breaks 20% line and moving upwards. William %R is giving us bullish signal with the break of -80% lines.
* The following analysis is for information only; Finotec is not responsible for any
decisions or misinterpretations based on the given text.
By Finotec’s professional analyst,
Tony B.
dealingdesk@finotec.com
Finotec Analysis Team
06 September 2007
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