(Bloomberg) -- The pound may extend its advance against the dollar if two technical indicators called moving averages cross. The U.K. currency’s 50-day moving average, currently at $1.5288, compares with the 200-day moving average of $1.5384. When a shorter-dated moving average rises through a longer-dated one it may signal more gains are in store. For the pound, such a cross would be the first occasion in three years. A moving average is a technical indicator that displays the average value of a security over a period of time.“Trading accounts that rely on technical analysis models will get a strong buy signal when the two moving averages intersect,” said Neil Jones, head of European hedge-fund sales in London at Mizuho Corporate Bank Ltd. “The pound will clearly get a boost when this happens.”
The pound was 0.1 percent higher at $1.6327 as of 4:36 p.m. in London. It will fall to $1.56 by year-end, according to the median forecast of 44 strategists surveyed by Bloomberg News.The last time the pound’s 50-day moving average climbed through the 200-day measure was in May 2006, which marked the beginning of a 12 percent rally to $2.1161 in November 2007, the highest level in 26 years.In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
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