By Fast Brokers – The Cable is taking a breather today, consolidating around yesterday’s highs as the currency pair tries to break past 1.45. However, as with the EUR/USD, gains from monthly lows have so far been negligible and heavy downward forces continue to weigh on the Cable. Election fervor seems to be cooling down and the next pit stop may not be until the release of the UK emergency budget on 6/22. Hence, focus now squares on fundamentals and developments in the EU. Speaking of fundamentals, CPI and RPI both came in hotter than anticipated, with retail prices logging the largest gains. Therefore, King will have to write another letter to the government explaining present inflationary pressure. Inflation comes at an untimely point for the BoE since the UK is trying to solidify its economic recovery and the government is looking to make budget cuts to reign in the deficit. Additionally, fiscal issues in the EU don’t help matters, and as long as the EU is unstable the BoE would be hard pressed to tighten liquidity. That being said, it will be interesting to see how King responds and whether the BoE tightens its rhetoric or casts aside the inflation as temporary. Speaking of the BoE, the central bank will release its meeting minutes to the public tomorrow and analysts well be looking through the language carefully. The U.S. will also release CPI data tomorrow, meaning the Cable could be rather active for the next 24 hours.
Technically speaking, the Cable faces mounting downtrend lines along with intraday highs, 5/14 highs and the psychological 1.45 level. As for the downside, the Cable has support in the form of intraday and 5/17 lows. Additionally, the psychological 1.43 level could serve as a solid support should it be tested.
Present Price: 1.4435
Resistances: 1.4451, 1.4474, 1.4493, 1.4507, 1.4531, 1.4563
Supports: 1.4431, 1.4416, 1.4398, 1.4366, 1.4340, 1.4305
Psychological: 1.44, 1.43, 1.45, May lows
Market Commentary provided by Fast Brokers.
Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
