By Fast Brokers – The Cable has undergone an intense selloff in the midst of a broad-based Dollar rally following the Fed’s surprise decision to raise the rate at the discount window by 25 basis points. Although 25 basis points may not be a large figure, the move led to a shift in investor mentality by signaling that the emergency window may be closing. Hence, yesterday was a statement that the Fed is truly gaining confidence in the economic recovery. The Dollar shot up in reaction and the Cable has endured heavy losses as a result. Additionally, UK Retail Sales disappointed by printed 7 basis points below analyst expectations (-1.2% vs. -0.5%E). The re-issuance of the VAT and adverse weather conditions likely weighed on consumption. However, the number is still discouraging because it’s the largest decline since March 2009. The Pound gave way in reaction and a large pop in the EUR/GBP highlights the currency’s relative weakness. Meanwhile, uncertainty continues to surround the EU amid worry about other countries and their deteriorating fiscal situations. America’s unemployment claims continue to hover at uncomfortably lofty levels and today’s EU PMI data set printed mixed. Hence, the economic recovery appears to be cooling around the globe, leading investors to the Dollar for safety. The Cable has been caught in the headwinds of the onslaught over the past 24 hours, likely because the Pound was holding up relatively well before. The UK will kick off next week with Nationwide HPI data and attention will be focused on the inflation report hearings. Although King has reiterated that this month’s sharp rise in prices was merely a blip, investors will be paying close attention to see whether the BoE shifts its stance at all.
Technically speaking, the Cable has multiple downtrend lines serving as technical barriers along with intraday highs and the highly psychological 1.55 level should it be reached. As for the downside, the Cable has multiple uptrend lines serving as technical cushions (off screen) along with intraday lows.
Present Price: 1.5393
Resistances: 1.5414, 1.5444, 1.5470, 1.5520, 1.5541, 1.5585
Supports: 1.5360, 1.5317, 1.5290, 1.5263, 1.5226, 1.5195
Psychological: February lows, 1.55, 1.53
Market Commentary provided by Fast Brokers.
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