By Fast Brokers – The Cable continued Wednesday’s rally, surging back above 1.47 and is eyeing previous June highs as investors await UK manufacturing and PPI data. Yesterday’s rally stemmed from encouraging Asia data. Australian employment grew faster than anticipated while demand for Chinese exports surged. Solid Asia data keeps hope alive that the wheels of the global economy are still rolling despite setbacks in the EU. The U.S. will cap the week by releasing retail sales and consumer confidence data, meaning the trading week could end on a volatile note. Last month’s UK manufacturing production was quite impressive and it will be interesting to see whether the recent wave of strong UK data continues. The Pound has undergone considerable depreciation, so a corresponding increase in demand for UK manufactured goods would not be surprising. More positive UK data could help the Cable overcome previous June highs barring a negative psychological event in the EU. That being said, investors should keep a close eye on the EU news wire since even though no news is good news, the EU is still fiscally troubled and it is unknown whether another shoe will drop. Yesterday’s BoE meeting was a nonevent as the central bank kept its monetary policy unchanged despite the discouraging developments in the EU. Meanwhile, investors will have to wait until next week’s release of the BoE’s monetary policy meeting minutes in order to get a better idea of how King & Co. feel about the UK’s condition economically. For the time being, all eyes will be on the broad-based risk trade to monitor just how far traders can extend the rally from May lows.
Technically speaking, the Cable still faces multiple downtrend lines along with 6/2 and 5/7 highs. Additionally, the highly psychological 1.50 level would likely serve as a solid technical barrier should it be tested. As for the downside, the Cable has fresh uptrend lines running through May and June lows along with 6/10 lows and the psychological 1.45 level should it be tested.
Present Price: 1.4707
Resistances: 1.4739, 1.4769, 1.4819, 1.4854, 1.4890, 1.4912
Supports: 1.4690, 1.4648, 1.4583, 1.4552, 1.4526, 1.4498
Psychological: 1.50, 1.45, June highs and lows
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