By Fast Brokers – The Cable continued yesterday’s downturn in reaction to UK Retail Sales printing a full basis point below analyst expectations. The Cable had held up very well during the EUR/USD’s deterioration earlier this week due to positive UK CPI and employment data. Hence, today’s negative Retail Sales number gave investors a fundamental reason to weaken the Pound, highlighted by a sizable pop in the EUR/GBP. Meanwhile, gold has dropped below $1100/oz and the S&P futures are testing their own highly psychological 1100 level. That being said, the Cable’s correlations are creating an environment suitable for a stronger dollar should fundamentals continue to cooperate. The UK will keep the data train rolling next week with the release of its Prelim GDP on Tuesday coupled with Nationwide HPI data. Furthermore, both the BoJ and the Fed will make monetary policy decisions, implying more volatility in the major Dollar pairs. Australia will kick off the week with PPI, followed by Existing Home Sales data from the U.S. the following day. In the meantime investors should keep a sharp eye on activity in the S&P futures and gold for any further technical setbacks.
Technically speaking, the Cable does have multiple uptrend lines serving as technical supports along with the psychological 1.60 level. That being said, our 1st-3rd tier uptrend lines are packed tightly together, indicating an area of solid support should it be tested. As for the topside, the Cable faces multiple downtrend lines along with 1/11, 1/04, and 1/22 highs. Therefore, despite solid support in the wings, the Cable now has a hill to climb to the topside.
Present Price: 1.6078
Supports: 1.6073, 1.6055, 1.6026, 1.5996, 1.5971, 1.5954
Resistances: 1.6099, 1.6119, 1.6142, 1.6161, 1.6180, 1.6215
Psychological: 1.60, 1.65, January highs and lows
Market Commentary provided by Fast Brokers.
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