GBP/USD has been pricing in the rate cut tomorrow, moving lower since yesterday with market expecting a 25bp Cut Tomorrow by BOE.

Want to know why? The last meeting they had was a Hold with 8:1vote. Data after that is pretty bleak, retail drops, mortgage and consumer lending drops, housing prices drops… so you would probably figure out that there is a slowdown in household spending.

The Daily Chart for GBP/USD shows a valid downtrend channel that has been going on since Mid December.

As of Posting seems that there will be a lot of room for a move down in GBP/USD.
Look Closely, apart from being Contained by the Channel,
Stochastic has room to move and there is a Hidden bearish Divergence, Price makes lower high and the Oscillators made Higher High.

Resistance Levels
1.9744 – Weekly Pivot
1.9863 – R1 Weekly
1.9954 – 30th January 2008 high
2.0000 – Psychological Level

Support Levels
1.9532 – S1 Weekly
1.9413 – S2 weekly
1.9334 – 22nd January Low

EUR/USD

Similar to how GBP/USD is acting this week, EUR/USD is awaiting for The Rate Decision By ECB. Expectations are for ECB to hold the interest Rate at 4% although recent data reflect a slowdown in Growth, ECB’s concern is not in slow growth of an economy but rather in containing the Inflation.

But Recent Market Turmoils have also affected EUR/USD with EUR/JPY Weighing it Down. As a result Daily Chart is beginning to reflect a range bound Market for the EUR/USD.

This is true as long as Price does not break Below 1.4365 Area. Since EUR/USD on the Daily Chart formed a Double top, prices are still expected to move down in the short term. Although We would probably see a pullback to the upside tomorrow, “IF” BOE does cut the interest Rate by 25bp and ECB holds the interest rate at 4%. A push up in EUR/GBP would probably Helped EUR/USD up for a little pullback, before testing 1.4365 area again.

Resistance Levels
1.4656 – S1 weekly
1.4806 – Weekly Pivot
1.4955 – 1st February 2008 High
1.5000 – Psychological Level

Support Levels
1.4511 – S2 Weekly
1.4361 – S3 Weekly and 22nd January 2008 Low

Two Major Pairs to look out for tomorrow and Good Luck with You Trade.