By Fast Brokers – The Cable has come crashing down from the perches of its Asia trading session rally. The risk trade rallied across the board after Australia’s trade Balance printed stronger than expected followed by an EU approval of Greece’s plan to reduce its outstanding fiscal debt. However, gains were soon washed away after Britain’s Services PMI data point came in below analyst expectations. UK data has been outperforming lately, making the pullback in services a shock for investors, and the Cable’s ensuing downturn reflected this mental state. Services comprise a large part of the UK’s GDP, so weakness in services trumps strength in manufacturing. The Cable’s intraday decline accelerated after U.S. ADP Non-Farm Employment Change data printed stronger than analysts anticipated. Strong U.S. employment numbers led investors to the Dollar as a safe haven due to the recent wave of positive U.S. economic data. Meanwhile, investors are awaiting U.S Services PMI data. An outperformance in U.S. services could paint a stark contrast between the U.S. and UK economies, enticing investors to favor the Dollar further. The BoE and ECB will make monetary policy decisions tomorrow, meaning the Pound could remain very active over the next 24-48 hours. Disregarding today’s services number, the recent wave of encouraging UK today may lead one to believe the BoE would tighten its monetary stance further. However, debt issues in Greece and tightening in China could lead the BoE to err on the cautious side this time around. Either way, the combination of events makes tomorrow’s BoE more interesting and a bit unpredictable.
Technically speaking, the Cable has multiple uptrend lines serving as technical cushions along with intraday and 2/2 lows. As for the topside, the Cable still faces multiple downtrend lines along with intraday and 1/29 highs. Furthermore, the psychological 1.60 area could serve as a technical barrier should it be retested.
Present Price: 1.5948
Resistances: 1.5961, 1.5975, 1.5992, 1.6005, 1.6015, 1.6024
Supports: 1.5937, 1.5921, 1.5900, 1.5876, 1.5863
Psychological: 1.60, December and October lows
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