Latest update on GBP/USD stand is that sterling has advanced against the dollar and this is the highest which has been observed in the past eight months. The current market trading on GBP/USD has hit 1.5947. This analysis was prepared from the U.K. producer price inflation and worse-than-expected U.S. jobs data.

GBP/USD is sidelined, leaving the view unchanged. It remains capped by the 1.60 region and whilst below here we remain unable to rule out dips to good interim support offered by the 20 and 55 day moving averages at 1.5651/1.5768 and the 1.5634 support line.

Provided any dips lower hold the 1.5634 support line, an upside bias will persist. Target is the 1.6000/20 area and then 1.6425. Note that a close below 1.5634 would negate this view, signalling a slide back to 1.5350/1.5296 (200 day ma and recent low).

Shorter term (1-3 weeks): 1.6000 target met Medium term (1-3 months): A close above 1.6000 will see a target of 1.6425 engaged.

Continues to vie with the USD as the most unwanted currency leaving CBL pretty sidelined. 1.5750 remains an important support level to watch with todays's employment numbers out. A clean break below there and I will turn more negative for medium term CBL prospects. EUR/GBP continues to make new highs in line with our view. As numbers continue to disappoint (consumer confidence overnight) I favour still higher. Support today at 0.8780 and 0.8690, resistance 0.8870 and 0.9000.

GBP/USD daily – Trend line break at 1.5648 required to trigger a deeper setback

* Having extended its corrective price action yesterday the market already reached key-support between 1.5762 and 1.5648 (int. 38.2 %/daily trend). * But as long as the latter is not broken decisively on hourly close (say lower than 1.5610) stronger evidence for a broader setback to 1.5296 (last low) is missing, whereas above 1.5648, 1.6295 to 1.6362 (w. trends) stays in focus.

Market View

The Dollar managed to stop the rot as it saw some profit taking on recent losses against a basket of currencies but was still sitting close to the recent lows ahead of a batch of data released this afternoon. The downside risk for the Dollar remains intact with investors still comfortable to take on further short positions against the U.S. currency. It seems obvious that there maybe a split within the Federal Reserve on the possible success of further quantitative easing as another Fed official, this time Kocherlakota of Minneapolis, who said that further uses of QE may have a "more muted effect" than anticipated. While the Fed's Rosengren stated that there is a risk of easing too slowly like Japan. Fed Chairman Bernanke will speak on monetary policy objectives later today in Boston.

The Euro eased from 1.4082 down to 1.4009 before rallying back to 1.4050 area. The Euro struck as high as 1.4123 yesterday morning in London which was its strongest level since 26th January this year. Holding above 1.40 could have short term significance. EU officials are beginning to sound concerns over the strength of the Euro but as we know from Japans experience trying to sound concern does little to affect the relative strength of your currency.

The Dollar continued to look very soft against the Yen as it fell from 81.62 back to 81.27 but holding above the new 15-year low of 80.89 seen yesterday. Downside risks prevail and the risk of the BOJ coming back to the market again are rising but we are way below the level where they first intervened so the effectiveness of their actions are clear to see. Japans PM Kan once again reiterated that they were very concerned over the Yens movement while Finance Minister Noda said that decisive steps will be taken on FX if needed but blamed the weak Dollar for the currency woes. BOJ Governor Shirakawa said that a return to sustainable growth may be delayed. The Nikkei fell by just under 1% near the close. Sterling was flirting with the 1.60 level having seen a dip to 1.5970 and then rising to 1.6028 area. Yesterdays high of 1.6067 which was its strongest point since 3rd February looks likely to be tested again. Against the single currency the Pound strengthened from .8791 to .8763 respectfully.

The Aussie backed off from the parity level having been so close yesterday after reaching .9994 level. In Asia it fell from ..9943 to .9890 before rising again to .9931 zone. While the elusive parity level is in sight its likely to be a tough nut to crack. The Kiwi fell from ..7592 to .7549 before bouncing back to .7582 having reached the dizzy heights of .7645 yesterday its strongest level in more than two years. The Canadian Dollar moved away from parity seeing a range of 1.0040 to 1.0066 in the Far East session.

The Chinese central bank promised to deepen Yuan reform but the currency would move within existing trading bands. China's Ministry of Commerce said Japan was in no position to criticise China on the value of the Yuan and that it should also not be made a scapegoat for the U.S.'s own domestic problems.

GBP - hard to see too much happening to GBP ahead of Wednesday's MPC minutes and Govt Spending review. Whilst USD moves continue to move CBL around intraday, we remain very much trapped in a 1.5750-1.6100 range. Noise regarding the government's plans suggest that talking about severe spending cuts was much easier than actually carrying them out, with welfare seemingly the area now earmarked for the most stringent cuts. EUR/GBP looks stuck on the 0.87 handle with good support at 0.8690 and sellers above the 0.8800 level.

GBP/USD hourly – Break below 1.5981/71 allowing for a deeper setback to 1.5817/1.5755

* Having broken 1.5981/71 (int. 38.2 %/pivot) the market seems to have entered a broader setback which could stretch out to support between 1.5817/1.5755 (38.2 %/last low) and 1.5691 (daily trend) without seriously denting the still prevailing up-trend. * As long as latter is defended a massive resistance cluster at 1.6306/51/79 (weekly trends/int. 76.4 %) remains in focus.

Forex - British Pound Eyes G20, Fed Speak, Earnings as Risk Trends Hold Sway

The British Pound was lower against the U.S. Dollar on Monday after the release of U.S. data on Industrial Production.

GBP/USD was trading at 1.5878, down 0.71% at time of writing.

The pair was likely to find support at 1.5838, today’s low, and resistance at 1.6106, Friday’s high.

Earlier in the day, official data showed that U.S. industrial production fell unexpectedly to -0.20% last month, from 0.20% in the preceding month.

Analysts had expected U.S. industrial production to rise 0.20% last month.

Meanwhile, the British Pound was down against the Euro and the Japanese Yen, with EUR/GBP gaining 0.49% to hit 0.8782 and GBP/JPY falling 0.94% to hit 129.06.

GBP/USD Open 1.5711 High 1.5773 Low 1.5650 Close 1.5673

On Friday Pound/Dollar decreased with around 100 pips, in line with the negative Interbank sentiment at around -9%. The Cable depreciated from 1.5752 to 1.5650 on Friday, closing the week at 1.5673. Today the British Pound is making recovery efforts, reaching up to 1.5773. On the 1 hour chart trading is within wide range, while on the 3 hour chart the upward channel is on hold. First resistance is today's peak at 1.5773. Break above it should extend the bullish movement further towards 1.5882. The nearest support is Friday's bottom at 1.5650. Going bellow it should extend British Pound's reduction further down towards next downward objective 1.5550. There are no major economic events for UK today. Quotes are moving just above the 20 and 50 the EMA on the 1 hour chart, indicating slim bullish pressure. The value of the RSI indicator is positive and declining, MACD is neutral and quiet, while CCI has crossed up the 100 line on the 1 hour chart, giving overall light long signals.

Technical resistance levels: 1.5773 1.5882 1.6000 Technical support levels: 1.5650 1.5550 1.5414

Trading range: 1.5705 - 1.5780

Trend: Upward

Buy at 1.5717 SL 1.5687 TP 1.5767

Intraday bias in GBP/USD remains neutral for the moment. We're still treating price actions from 1.5649 as consolidative and would expect fall from 1.6104 to resume sooner or later. Below 1.5649 will target 1.5296 support first. Also, considering bearish divergence condition in daily MACD, break of 1.5296 will confirm that whole rally from 1.4230 has finished too. However, break of 1.5894 resistance will flip intraday bias back to the upside and bring stronger rebound to retest 1.6014 high instead.

In the bigger picture, price actions from 1.3503 are viewed as consolidation to fall from 2.1161 only with rise from 1.4230 as the third leg. There is no clear indication that such consolidation is finished. Current rise from 1.4230 could extend to 1.7043 resistance and above. However, we'd expect strong resistance between 1.7043 and 50% retracement of 2.1161 to 1.3503 at 1.7332 and finally bring long term down trend resumption. In any case, a break of 1.4230 support will indicate that the consolidation is completed and down trend from 2.1161 is resuming for another low below 1.3503.

Dollar remains firm in early US session as on the one hand, risk appetites recede on mixed earnings. US equities are also set to open mildly lower after mixed durable goods orders data. On the other hand, dollar is supported by speculations that the QE II program to be announced by Fed next week will be on a gradual approach. Aussie remains the weakest currency today after disappointing CPI data cooled expectation of a November hike from RBA.

Headline durable goods orders in US jumped 3.3% in September. However, ex-transport orders unexpectedly dropped -0.8%. The data raises some concern that business investment is slowing and will continue to shrink in the coming months, and thus drag down the already fragile economic recovery in US. Other data released today saw Eurozone M3 money supply rose less than expected by 1.0% yoy in September German CPI rose 0.1% mom, 1.3% yoy in October. New Zealand NBNZ business confidence rose to 23.5 in October.

A WSJ article said that the QE II program to be announced by Fed next week will be a "measured approach" only which worth several hundred billion dollars over a few months, and then leave the open for extension open. This is in sharp contrast to earlier speculations of a program in magnitude of a trillion or more.

Aussie is one of the weaker currency today as pressured by disappointing consumer inflation report. CPI rose 0.7% qoq, 2.8% yoy in Q3, below expectation of 0.8% qoq, 2.9% yoy. RBA Trimmed mean CPI rose 0.6% qoq, 2.5% yoy versus consensus of 0.7% qoq, 2.6% yoy. RBA weighted mean CPI rose 0.5% qoq, 2.3% yoy versus expectation of 0.7% qoq, 2.6% yoy. The data dampens the hope that RBA will hike in November as inflation is slower faster to the lower band of 2-3% target range.

Looking ahead, RBNZ rate decision will be the main focus. The RBNZ will likely leave the OCR unchanged at 3% for a second month in October. The market has priced in no chance of a rate at the upcoming meeting as Governor Alan Bollard signaled interest rates will be on hold until 2011. Although CPI for 3Q10 exceeded consensus, it's not significant to change policymakers' cautious stance in economic developments.