By Fast Brokers – The Cable is battling its psychological 1.48 level once again after bouncing off of intraday lows in the wake of an uptick in UK retail sales data. The improvement in consumption comes after another solid claimant count change figure, both encouraging developments in regards to the sustainability of the UK’s economic recovery. Although the UK will release mortgage approvals and public sector borrowing data tomorrow, the remainder of the trading week should be about the EU and U.S. Spain is fighting the flames of this week’s rumors that it will need a liquidity lifeline by announcing the government will release the bank stress test results. Meanwhile, EU leaders are meeting today for a one day summit as the discuss how to create a more unified and stable financial system throughout the union. If leaders leave the summit with a coordinated response this could help bolster confidence in the Euro and help lift the risk trade across the board as the FX markets participate in a psychological tug of war. In addition to developments in the EU, investors will also be paying close attention to today’s U.S. data set. The U.S. will release CPI, weekly unemployment claims and the Philly Index. The key figure will likely be CPI. If prices rise faster than anticipated this could place a bit of downward pressure on the Cable over concern that the Fed may have to raise rates sooner than anticipated. On the other hand, if inflation stays in check then this will get the Fed the green light to keep the gates of liquidity open, a positive for the Cable. In all, despite the fact that considerable economic headwinds remain, investors are gaining more confidence by the day in the risk trade as the Cable and most other dollar pairs regain more ground from May lows.
Technically speaking, the Cable faces downtrend lines running through April highs along with 6/14 highs and the psychological 1.48 level. As for the downside, the Cable is developing a new near-term support structure, including downtrend lines running through May and June lows. The Cable also has technical supports in the form of 6/14 and 6/11 lows along with the 1.47 and 1.46 level should they be tested.
Present Price: 1.4800
Resistances: 1.4810, 1.4854, 1.4890, 1.4912, 1.4953, 1.4988
Supports: 1.4750, 1.4720, 1.4680, 1.4628, 1.4585, 1.4544
Psychological: 1.50, 1.45, June highs and lows
(click chart to enlarge)
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