With an early-year run that took it to its highest level vs. the dollar since the early 90s, the British pound has emerged from the continental shadow of the euro and is basking in the attention of forex traders around the globe.
Its traditionally choppy trading notwithstanding, the pound gained approximately 15 percent from April 2006 to the Jan. 23, 2007 high of 1.9914. By March 1, it had pulled back a little and was trading around 1.9606.
The following review of British pound/U.S. dollar (GBP/USD) price characteristics is based on data from Feb. 1, 2006 through Jan. 31, 2007. Overall, the trend was up during this period, but there were also lengthy sideways and countertrend moves.
During the first quarter of 2006, GBP/USD traded below 1.7300, but in January 2007 the pair closed over 1.9800 for the second month in a row. From April to mid-May 2006, the pair traded from below 1.7300 up to and over 1.8900. Then a broad trading range (with a bullish bias) developed: A number of times the pair edged above 1.8900 and closed above 1.9100, only to see sellers come in and take the market back down.
The last pullback took the GBP/USD pair below 1.8600 in October 2006. From there, the trend reasserted itself again when the market started an advance that peaked just above 1.9800 by Dec. 1.
The 12-month study period from Feb. 1, 2006 to Jan. 31, 2007 contains 260 trading days. The analysis explores tendencies and patterns in the GBP/USD’s daily range, close-to-close changes, and up-closing vs. down-closing days. A second, intraday study uses 60- minute bars from Dec. 1, 2006 through Jan. 31, 2007. This analysis characterizes the typical hourly price behavior and identifies the most volatile portion of the 24-hour trading session.
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