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By Michael Hewson

FX afternoon update -

Sterling ends week on positive note while Euro looks toppy

By Michael Hewson LONDON (ShareCast) -

After spending the first part of the week looking quite sick, sterling has managed a remarkable turnaround, reversing the decline of the previous 2 weeks in sharp fashion.

With Q3 GDP and PSNBR for September due out next week, it remains to be seen whether or not these gains can be maintained. The Sterling rate index is currently pushing against resistance at 79.30/40 a break of which would target 80.00.

GBPUSD after opening the week around 1.5850 the pound is currently maintaining itself above the 50 day MA at 1.6270, it needs to break above the resistance at 1.6440/50 to reinforce the gains of the past few days, otherwise we could see a drift back lower.

EURGBP is currently examining the support between 90.80 and 91.00 in the short term, a break would imply a further test towards 0.8980. Opening the week just below 0.9300, the Euro has fallen back quite sharply. If it closes below 0.9160 the chart will show a bearish engulfing week, which would undermine the case for a test of parity in the near term.

EURUSD we could well have seen the highs in the Euro in the short term and missed out on hitting 1.5000, albeit by 30 odd points. The daily charts posted what looked like a hanging man candlestick yesterday and look to be gearing up for a bearish engulfing candle close today, despite a very positive weekly candle. A daily close below 1.4840 could well signal a deeper sell-off, and re-target 1.4625.

USDJPY still looks fairly well-supported above 89.25 trend line from the lows, after posting twin lows at 88.00 last week. If we do get a bounce in the US dollar, and we would need a move back in the US dollar index for that to happen, then we could see a move back to 93.00 but we would need to crack 91.60 first.

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