By Fast Brokers
The Cable is climbing higher with a purpose, leaving 1.50 in its past as it takes full advantage of its upward momentum. Bulls are encouraged as positive data continues to roll in from Britain. Yesterday’s RICS House Price Balance release only reconfirmed what we saw the last two weeks, a stabilization in home prices. Since the economic crisis began in the housing sector, an upward slope in prices gives hope that the worst may be behind us. The key for the GBP/USD’s rally today is the much better than expected Manufacturing Production number. Manufacturing Production has recovered to its highest level since June 2008 and in the process reached a respectable, pre-crisis level. Meanwhile, the Cable has blown by our key, last defense downtrend line while leaving 1.50 behind. Therefore, we maintain our medium-term bullish outlook for the aforementioned reasons.
While we maintain bullish on the Cable, the currency pair could encounter some headwinds in the near-term as it approaches January 09’ highs. Though this barrier isn’t likely to kill the Cable’s uptrend, it could stall the rally temporarily should the bulls run out of energy. Therefore keep a close eye on volume. If action should die down, the GBP/USD could experience a near-term pullback and consolidation.
The BOE will keep the news flowing this week with Claimant Count Change (CCC), Average Earnings Index, and the BOE Inflation Report hitting the newswires in Wednesday’s trading session. The CCC will be watched closely since April’s number revealed a surprisingly swift drop, indicating an improving employment market. Therefore, volatility could easily pick up should the numbers surprise analysts in either direction.
Britain will release its BRC Retail Sales Monitor and RICS House Price Balance late in Monday’s session followed by Manufacturing Production and Trade Balance on Tuesday. Therefore, we could see some reasonable volatility over the next 24 hours.
Fundamentally, we find resistances of 1.5322, 1.5374, 1.5438, 1.5526, and 1.5576. To the downside, we see supports of 1.5256, 1.5213, 1.5158, 1.5114, and 1.5059. 1.50 serves as a key psychological cushion with 1.55 acting as a psychological barrier. The GBP/USD is currently exchanging at 1.5295.
Market Commentary provided by Fast Brokers.
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