By Fast Brokers – The Cable declined on climbing volume earlier today, yet has balanced on our 1.6210 support once again. The GBP/USD is rising back towards our 3rd tier downtrend line as investors hold onto their hope of a global economic stabilization. We notice considerable strength in the EUR/USD today, indicating investors are supporting a near-term depreciation of the Dollar. However, as with the EUR/USD, the GBP/USD has an important downtrend line bearing down on price. Therefore, a near-term downward pressure remains while crude futures and U.S. equities struggle. Regardless, today’s defense of the GBP/USD and EUR/USD is encouraging since the respective currency pairs are at a critical juncture as far as patterns are concerned. With the global economic stabilization at a crossroads, investors are waiting to see if the optimistic signs grow into more substantial results, or at least begin to approach pre-crisis levels. The markets are indicating investor hesitation, represented in the Cable by sideways movement over the past 10 sessions.
Meanwhile, the Pound remains in an advantageous position globally since its economic data continues to outperform. Britain’s BBA mortgage approvals came in above expectations, supporting the rise in British home prices we’ve seen recently. Additionally, unemployment is declining and the British manufacturing and service sectors are rebounding. Hence, even though there have been a couple hiccups in Britain’s economic data, the Pound maintains its comparative strength globally. Favoritism of the Pound is exemplified by the repeated defense of our 1.6210 support while ignoring near-term weakness in U.S. equities and crude. Regardless, should U.S. equities stumble into a more protracted decline the Cable would unwillingly follow suit due to their positive correlation. A weak U.S. economy implies a decrease in demand for British goods and services, causing further troubles for Britain’s economy due to economic coupling. Since U.S. equities seem overpriced and a global economic recovery isn’t written in stone, we maintain our negative outlook on the GBP/USD trend-wise. However, even if the Cable should struggle in the near-term, the currency pair’s medium-term uptrend is well intact with several technical and psychological supports in place.
Present Price: 1.6349
Resistances: 1.6371, 1.6412, 1.6498, 1.6574, 1.6624
Supports: 1.6315 1.6263, 1.6210, 1.6151, 1.6102
Psychological: 1.65, 1.60
Market Commentary provided by Fast Brokers.
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