By Fast Brokers – The Cable has undergone a hefty pullback today as a combination of overbought conditions and negative psychological developments hit the currency pair. First off, the Cable has been on a tear lately, so today’s weakness is not too shocking. However, the Cable did react badly to a new poll showing the Conservatives losing some of their advantage over Labor. Today’s poll contradicts the optimism built off of Sunday’s poll showing the Conservatives gaining ground. Altogether, the message being sent is that the election is too close to call and the probability of a hung parliament is increasing. Gordon Brown set an election date for May 6th, bringing parliament into full focus. The concept of a hung parliament has damaged the Cable recently due to concern that the UK government will not be able to pass austerity measures necessary to tackle deteriorating fiscal conditions. Meanwhile, it will be interesting to see if the Cable can stabilize from today’s hit and regain the momentum of its uptrend established from March lows. In addition to chatter about upcoming UK elections, uncertainty has returned in Greece. Greek officials are expressing their discontent for IMF involvement in any financial aid packages due to stringent fiscal measures being proposed by the monetary fund. Greek bonds yields are rising on the news and the Euro is taking another downturn. Hence, investors should keep an eye out for any new developments in the EU since they can impact the risk trade as a whole. Attention now turns to the U.S. with FOMC meetings due this afternoon. The UK will return to the data wire tomorrow by releasing Services PMI and Halifax HPI data points. Since the UK’s GDP is reliant on the services industry, tomorrow’s PMI number could have a noticeable impact on the Cable.
Technically speaking, the Cable is still trading comfortable above downtrends running through March 17 highs, or the 1.5380 area. Hence, the Cable’s uptrend is still alive and well despite today’s pullback. Additionally, the Cable has fresh uptrend lines serving as technical cushions along with intraday and 3/31 lows. On the other hand, the Cable has dropped below April 2nd lows, and it will be interesting to see if the currency pair can stage an intraday recovery.
Present Price: 1.5150
Resistances: 1.5159, 1.5167, 1.5177, 1.5194, 1.5205, 1.5215
Supports: 1.5139, 1.5125, 1.5106, 1.5095, 1.5085, 1.5071
Psychological: 1.53, 1.52, March highs and April Lows
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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