Fear continued to grip the capital markets last week, even though skepticism only had a major impact on the US markets on Thursday.  The equity and commodity markets consolidated and moved higher early during the week just to see trepidation creep in during the second half.  On the Forex market, the Dollar gave back some of its recent gains, but found support, which led to nice rally.  The Australian dollar, the Euro and the Pound all faced losses as investors fled to the U.S Dollar.

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  Bank of England - 12:00 GMT

 

On the first rate announcement of the day, due at 12:00 GMT, the Bank of England is likely to keep interest rate unchanged at a record-low of 0.5%. Investors’ polls coincide almost unanimously to this forecast, pointing out in addition that they expect no further increments to the BoE’s current scope of quantitative easing measures. The central bank initiated in March last year an unprecedented bond-purchase program amid the worst global financial crisis since the 1930s. Rumors circling the market suggest that the BoE may announce today a pause to its asset-buying program at the current level of 200 billion pounds, making the first move towards stabilizing its monetary policy.

Well let’s look at each pair separately first on an hourly technical level:

GBP/USD has been in a downtrend on the hourly since last Friday, Jan 29^th, until its low, Feb 1^st at 1.5848.  If we draw a Fibonacci line from these two levels we see that the pair has slowly retraced all the way back up through the 100 hour moving average to the 61.8 % retracement around 1.6050, then almost to the 200 hour moving average and all the way back down hovering now between R1 and key support.  Look to resistance levels (R1 & 100 hour MA at 1.5975, R2 1.6000/10, R3& 200 hour MA around 1.6050/75 ) above as good reference points for  entries on the downtrend and a break of key support on the downside to next support level around 1.5731 which was the recent low on the daily.