By Fast Brokers – The Cable is continuing its remarkable run, jetting towards 1.70 in a hurry as we anticipated. The Cable has busted through all of our trend lines, setting fresh 2009 highs in the process and making its case for a climb back to pre-crisis levels. The EUR/USD is setting new 2009 highs today as well, indicating the significance of today’s movement. However, 1.70 should play a psychological role for the near-term with the S&P dangling just below 1000. While all correlations are confirming the uptrend in the GBP/USD, 1000 should prove to be a tough battle for the S&P even if the level is breached temporarily. The Cable has been on such a run as of late, we would not be surprised to see the currency pair cool soon as investors anticipate the wave of data and central bank meetings over the next few days.
The Cable is getting its positive boost from better than expected manufacturing PMI data at home and abroad. Britain’s manufacturing PMI ended its contraction, registering growth (50.8) for the first time since May 2008. America’s manufacturing PMI data also headed towards growth, falling just short of the neutral 50 mark. Additionally, the markets are reacting to positive manufacturing and export data flows from China. The signs of a global recovery in manufacturing coupled with a better than expected Q2 earnings season are driving the Cable to confirm its uptrend.
The wave of economic data will only grow in size tomorrow, with Britain releasing its Halifax HPI and construction PMI data points while the U.S. announcing housing and pricing data of its own. Better than expected economic data points would likely fuel the Cable’s rally since investors would price in the BOE confirming its decision to cap QE funding at its meeting on Thursday. If the BOE and ECB both keep their alternative liquidity plans in check, investors would take this as a sign that the central bank governors are comfortable with the recovery taking root.
Meanwhile, investors should keep an eye on the S&P’s interaction with 1000. If 1000 turns into a dense area of resistance the GBP/USD may opt to consolidate around 1.70. However, if the S&P futures leave 1000, the GBP/USD could have added upward mobility due to its positive momentum.
Present Price: 1.6923
Resistances: 1.6939, 1.6969, 1.7025, 1.7064, 1.7104
Supports: 1.6864, 1.6832, 1.6815, 1.6768, 1.6731
Psychological: 1.70
Market Commentary provided by Fast Brokers.
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