By Fast Brokers – Although UK CPI surged this month, both the headline and core printed one basis point below analyst expectations. Furthermore, King played down the significance of the rise in consumer prices once again as a temporary flare. Additionally, King reiterated the BoE’s ability to reinstate QE measures should inflation drop back below 2%. Hence, Mervyn King is batting away any excitement which could be generated from the rise in UK consumer prices. In fact, King’s steadfast denial of excessive inflation is a bit disconcerting for the Pound since the BoE could be inclined to keep its monetary policy loose for a while should the recent upward pressure on prices prove temporary. Elsewhere in Europe finance ministers announced they are giving Greece 30 days to prove it can commit to its austerity plans. Hence, the EU has effectively punted and may want to give the markets another month to settle before deciding whether to take more action. Meanwhile, investors are awaiting the U.S. Empire Index and TIC Long-Term Purchases data. It will be interesting to see how the data impacts the Dollar, particularly if it prints positively. Negative U.S. data could lead investors to favor the Pound over the Dollar, although it may also send investors towards the Dollar for safety. Hence, behavior of the Greenback is still a bit unpredictable as investors weigh economic uncertainty in the EU and tightening in China. The UK will release Claimant Count Change data tomorrow along with the BoE’s monetary policy minutes. The CCC number gives the Cable an opportunity to build some upward momentum should the data impress. However, weak employment data could weigh on the Cable as investors question the ability of inflation to hold above the BoE’s 2% target.
Technically speaking, the Cable has multiple downtrend lines serving as technical barriers along with intraday and 2/10 highs. As for the downside, the Cable has multiple uptrend liens serving as technical cushions along with 2/11 and 2/8 lows. Furthermore, the psychological 1.55 level could serve as a sturdy technical cushion should it be tested.
Present Price: 1.5665
Resistances: 1.5700, 1.5717, 1.5731, 1.5747, 1.5763, 1.5783
Supports: 1.5662, 1.5640, 1.5621, 1.5609, 1.5583, 1.5557, 1.5533
Psychological: 1.55
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