Unable to rally above 1.6600 the GBP/USD has retreated lower into the trading range on the daily chart. The pound sterling lost ground against the U.S. Dollar on both Wednesday and Thursday before gaining back some losses as Ben Bernanke put traders and investors back in “risk on” mode to end the week. The second quarter U.K. GDP came in line at 0.2%. The July U.K. consumer confidence reflected a three-month low as the U.K. is concerned about the same thing that most countries and central banks are concerned about: A slower-than-expected recovery.

Contrast this to the issues the U.S. Dollar has on Friday. Bernanke stepped up and took QE3 off the table without uttering the words. The economy, he says, is not in bad enough shape to merit immediate stimulus which in turn was perceived as optimism that helped the Dow rally 134 points to close the week…this in spite of a major hurricane bound for the most populated area of the east coast.

The dollar’s fall through 74.00 allowed the GBP/USD to move higher and when looking at the market phase on the daily cable, it’s clear to see that the uptrend that was (arguably) in place from August 15 to August 23 has transitioned into a more sideways, volatile market phase without a clear horizontal floor but with uptrend line support stemming from the July 12 low. In fact the Friday session was able to rally above the trendline support at 1.6280, also a minor psychological level.

Near-term the trend may be up on the cable, as seen across the 15 and 30-minute time frames however the 240-miniute chart is reaching the first trigger for a swing short as prices correct higher into the 34 period EMA close.