By Fast Brokers – The Cable has tested its highly psychological 1.50 level, extending its impressive run from May lows after the MPC minutes revealed a dissenting member who thought the minimum rate should be listed by 25bp. Eve n though the dissenter was a lone wolf, it shows incessant inflation in Britain is beginning to weigh on the BoE’s monetary policy decisions. Regardless, it’s only one vote and it shouldn’t drive the Cable for too long since the EU fiscal crisis will likely hold the central bank at bay. Speaking of the EU crisis, underperformance in the union could actually bring down inflation in Britain over the medium-term, supporting the BoE’s past disregard for inflationary pressures as a lasting trend. In addition to the surprising MPC vote, Osborne’s budget cuts have been well-received by investors, helping the Pound outperform its peers. Lastly, the Fed expressed concern that economic malaise in the EU could weigh on U.S. economic growth, supporting the Fed’s loose monetary policy for the foreseeable future, a Dollar negative. Overall, the Cable has had more than enough backing to test 1.50, though it remains to be seen whether the currency pair can drive past this psychological level over the near-term considering the run it has been on this month. That being said, a round of profit taking wouldn’t be surprising at some point in time. Investors will remain focused on the U.S. today with durable goods orders and weekly unemployment claims releases on tap. The UK will be quiet on the data wire again tomorrow, leaving the Cable up to prevailing trends, a positive considering the currency pair’s recent performance.
Technically speaking, the Cable faces technical barriers in the form of 5/10 highs and the psychological 1.50 level. As for the downside, the Cable has intraday and 6/23 lows serving as technical cushions.
Present Price: 1.4982
Resistances: 1.4984, 1.5007, 1.5028, 1.5051, 1.5073, 1.5105
Supports: 1.4975, 1.4931, 1.4894, 1.4852, 1.4815, 1.4793
Psychological: 1.50, 1.45, June highs and lows
(click chart to enlarge)
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.
