By Fast Brokers – Negative news has dragged the Cable back below 1.45 after Hungary’s government revealed that the previous government manipulated fiscal reports to hide budget shortfalls. The concept of another Greece hit the Euro hard due to the exposure of EU banks to Eastern European economies. The whole risk trade has taken a hit and the Cable was no exception. However, the Cable is still above May lows and could salvage its near-term bottom should anxiety subside next week. Meanwhile, the Pound has outperformed due to last week’s solid UK data. Although the Halifax HPI mixed, the Nationwide HPI met expectations. Furthermore, both the manufacturing and service PMIs satisfied estimates, allowing the Cable to stay afloat despite volatility in the Euro. Across the pond, U.S. employment data disappointed analysts, bringing the sustainability of the global economic recovery into question since most of the new hires in the U.S. are temps. Meanwhile, the EUR/USD has suffered another technical setback by dropping beneath 1.20. Hence, should the EUR/USD continue to deteriorate this could place downward pressure on the Cable due to its risk correlation. Over the near-term it will be important for the Cable to hold 1.45 and stay above uptrend lines running through May lows. Otherwise the Cable may take another leg down as well. The data wire will be relatively quiet until Thursday’s central bank meetings, meaning pscyhologicals will be in the driver’s set for the next few trading sessions. Therefore, investors should continue to actively monitor news wires from around the globe.
Technically speaking, the Cable still faces multiple downtrend lines along with 5/28 and 6/2 highs. As for the downside, if 1.45 doesn’t hold the Cable has technical cushions in the form of 5/28 and 5/19 lows.
Present Price: 1.4472
Resistances: 1.4498, 1.4526, 1.4554, 1.4587, 1.4609, 1.4640, 1.4673
Supports: 1.4440, 1.4409, 1.4382, 1.4348, 1.4321, 1.4301
Psychological: 1.45, June highs and May lows
(click chart to enlarge)
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