By Fast Brokers – The GBP/USD is topping out just below 1.67 after strengthening yesterday despite a sizable weakness in the EUR/USD. The Pound’s relative strength is highlighted by a pullback in the EUR/GBP, and stems from Britain’s much better than expected Claimant Count Change number from Wednesday. Britain’s relative inactivity on the newswire after this data release has allowed the GBP/USD to hold up pretty well considering investor uncertainty over the last 24 hours.
However, although Britain has been quiet, today’s econ data from the EU and U.S. have been disappointing all around. The EU’s GDP data came in below analyst expectations, confirming that the EU’s economic recovery is occurring at a more gradual rate than anticipated. Meanwhile, the U.S. Trade Balance widened, Import Prices printed 4 basis points light, and the Prelim UoM Consumer Sentiment number is discouraging. The S&P futures and crude are both moving lower in reaction to today’s wave of data, meaning the GBP/USD may not be far behind due to the Dollar’s negative correlation with equities. Furthermore, investors should keep in mind that BoE Governor King announced that the central bank is still open to addition liquidity injections should the conditions warrant it. Therefore, if U.S. equities selloff today, the Pound’s excitement over unemployment data may wear thin.
Technically speaking, the GBP/USD has some solid near-term supports in place due to the Pounds recent relative strength. The Cable still has our 1st and 2nd tier uptrend lines serving as technical cushions along with 11/12 and 11/05 lows. Additionally, the Cable’s psychological 1.65 level could work in the currency pair’s favor shout it be tested. As for the topside, the GBP/USD also faces multiple downtrend lines along with 11/11 and 11/09 highs. If the Cable should break through these technical barriers, the psychological 1.70 level should serve as the next important topside technical. Meanwhile, investors should keep an eye on the S&P futures and well as monitor gold’s ability to hold above $1100/oz.
Present Price: 1.6637
Resistances: 1.6666, 1.6694, 1.6730, 1.6761, 1.6797, 1.6828
Supports: 1.6615, 1.6598, 1.6574, 1.6528, 1.6497, 1.6466
Psychological: 1.65, 1.70, August Highs, November Lows
Market Commentary provided by Fast Brokers.
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