Pound under pressure
Sterling has broken below its 20-day simple moving average, and has fallen for a fourth day against the USD dollar as British prime minister Gordon Brown tried to reshuffle his cabinet in an attempt to establish loyalty of ministers. The reshuffle is in response to several ministers walking out of the government. The poor performance in the European Union parliamentary elections and uncertainty of the political direction of the country is a constant factor bearing down on the currency. The path that seems most inevitable and one of least resistance for the GBP/USD is a move to the 200-day simple moving average of USD1.5398.
A large reason for the continuing strength of the dollar at present is a recent report showing a significantly slower pace of job loss within the US economy. There are also speculations that since Asia and Europe currently have weak equity markets, US futures, in combination with lower risk aversion are playing a role in supporting the greenback.
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