By Fast Brokers – The Cable is in sync with the EUR/USD popping from intraday lows following yesterday’s nasty selloff resulting from Germany’s surprise decision to suspend short selling of government bonds until March 2011. The decision shocked the risk trade, sending the Cable back towards its psychological 1.42 level. The Cable is now dealing with March 2009 levels in what can be seen as a large step back for the currency pair. The BoE meeting minutes showed that they believe price growth we’ve seen is temporary, they are more concerned that issues in the EU could spill over into the UK. This is not the news investors wanted to hear as the parliament tries to move ahead with a coalition government. The Tories are still on track to introduce an emergency budget on June 22nd, though the 6 billion pound deficit reduction is a flash in the pan compared to debt outstanding. Meanwhile, as with the rest of the risk trade the Cable is just trying to form some kind of lasting bottom as the downturn carries on. That being said, investors should continue to monitor conditions in the EU as government officials whether aggressive demands from Merkel & Co. For further disintegration in the EU could drag the Cable lower with the EUR/USD. The UK will splash the data wire tomorrow with its retail sales release and a positive figure could help buoy the Cable. However, attention will likely remain focused on the EU as they scramble for solutions.
Technically speaking, the Cable faces mounting downtrend lines along with intraday and 5/18 highs. Additionally, the psychological 1.45 area could serve as a solid barrier should it be tested. As for the downside, the Cable has support in the form of intraday lows and the psychological 1.42 level.
Present Price: 1.4352
Resistances: 1.4366, 1.4398, 1.4416, 1.4431, 1.4451, 1.4474
Supports: 1.4340, 1.4305, 1.4274, 1.4248, 1.4236
Psychological: 1.42, 1.45, May 2010 and April 2009 lows
Market Commentary provided by Fast Brokers.
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