By Fast Brokers – The Cable is drifting higher as investors sell the Dollar in reaction to today’s U.S. data set. U.S. Retail Sales topped analyst expectations while CPI printed flat. Hence, although consumption is increasing prices are dragging, giving the Fed ammo to keep its monetary policy loose, a Dollar negative. Meanwhile, the Pound is outperforming the Euro due to recent positive UK data, including this week’s Trade Balance data. UK manufacturing is picking up and house prices are rising, meaning the UK economy appears to be stabilizing and this gives the BoE little reason to loosen further. However, parliamentary elections are around the corner and as they approach psychological could take control once again. Meanwhile, investors will focus on China and the U.S. tomorrow. China will release a key data flow, including GDP and CPI. China’s data will be followed by key U.S. manufacturing figures along with weekly Unemployment Claims and TIC Long-Term Purchases. Hence, the global economic recovery will get another litmus test tomorrow and most of the attention will likely be placed on China. Should China’s GDP storm higher this could give renewed confidence to the risk trade. However, if prices rise beyond analyst expectations this could increase speculation that China will need to tighten and/or appreciate soon, a possible negative for the risk trade. Needless to say it will be interesting to see how the Cable and Dollar as a whole reacts to tomorrow’s data flow.
Technically speaking, the Cable faces technical barriers in the form of intraday, 4/12, 2/23, and 2/17 highs. Additionally, the psychological 1.55 level could serve as a solid obstacle should it be tested. As for the downside, the Cable has fresh uptrend lines serving as technical cushions along with intraday and 4/8 lows. Additionally, the psychological 1.54 area could continue to serve as a solid support over the near-term.
Present Price: 1.5454
Resistances: 1.5470, 1.5494, 1.5522, 1.5539, 1.5554, 1.5575
Supports: 1.5444, 1.5429, 1.5404, 1.5386, 1.5358, 1.5337
Psychological: 1.55, 1.54, 1.53, February highs and April Lows
(click chart to enlarge)
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