By Fast Brokers – The Cable continues to waver underneath downward pressure as investors punish the Pound over concern that a hung parliament would not be able to fix the UK’s fiscal imbalance. Today’s weak Manufacturing Production release placed additional downward pressure on the Cable as investors worry that the UK’s economic recovery is slowing. The most discouraging part of the release is that the Cable’s rapid decline has not registered a corresponding increase in demand for UK manufactured goods. Speaking of the Cable’s rapid descent, it will be interesting to see whether the currency pair finds some kind of solid near-term support considering the extent of its downturn since 2009 highs. However, it seems that as long as the parliamentary race is so close and the BoE leaves open the possibility of further QE the Cable may have trouble finding motivation to establish an upward momentum. Brown did announce today that the government will release its budget in two weeks. If the budget is received well by analysts and traders then this could provide the boost the Pound is looking for. Meanwhile, the EUR/GBP is rocketing higher and is looking to make another bid for parity. Hence, investors clearly remain bearish on the Pound. Although the UK will be relatively quiet on the data wire tomorrow, China and Australia will print key data sets. Additionally, the U.S. will release its Trade Balance figure along with weekly Unemployment Claims. Therefore, activity could pick up over the next 24 hours.
Technically speaking, the Cable has our 2nd and 3rd tier uptrend lines serving as technical cushions along with intraday and 3/2 lows. Our 1st tier support sitting in the distance could serve as a key support since it runs through previous 2010 lows. As for the topside, the Cable faces multiple downtrend lines along with intraday and 3/5 highs. Meanwhile, the psychological 1.50 area could serve as a solid technical barrier should it be tested.
Present Price: 1.4937
Resistances: 1.4960, 1.4975, 1.4987, 1.5007, 1.5024, 1.5036
Supports: 1.4937, 1.4924, 1.4901, 1.4885, 1.4870, 1.4851
Psychological: 1.50, March lows
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