GBP/USD: Sterling reaches key level against dollar

Tracking risk appetite across bipolar asset markets

TUESDAY FEBRUARY 5, 2013       16:14:00 GMT

In trading Tuesday (Feb 5th) sterling has broken to a new six month low against the US dollar.

The failure to sustain a move back up above the 1.58 level earlier today (highlighted in yellow) suggests on the daily chart that an eventual target to be tested could well be a check of whether the 1.5270 level seen on June 1st last year provides reliable support.

However a review of the weekly chart shows that there is a very clear triangular formation extending from the March 2009 lows for sterling - which coincided with the post GFC turning point for most equity markets - and that the current level is in danger of a break below the trend-line through the lows which has now been in place for almost four years. The current testing of this key level is quite critical for the UK currency and a decisive close below it in today’s session would open up longer term targets below $1.50.