By Fast Brokers – The Cable is bouncing nicely from intraday lows as the currency pair follows U.S. equities higher. BP is trading higher by over 5% and is likely boosting the Pound with investors reacting positively to news that BP will liquidate some assets in order to account for the Gulf cleanup tab. Meanwhile, although Britain’s final GDP printed in line with analyst estimates, the current account deficit came in much lower than anticipated. The downturn in the current account reflects the large trade balance deficit we saw last week. Hence, the downturn on the Pound has clearly taken its toll on consumption and imports which haven’t been offset by exports. The news knocked the Cable below an uptrend line and its highly psychological 1.50 level, though the currency pair has regained most of its losses at this point. Investors will now turn their attention to U.S. earnings with Alcoa kicking off the season after the bell. The earnings season as a hint of uncertainty to it since investors are uncertain how much fiscal problems in the EU have impacted U.S. corporate performance. If U.S. earnings disappoint then this could weigh on the Cable and risk trade as a whole. The UK will release its key CPI figure tomorrow and it will be interesting to see if it remains above 3%. If so, speculation could continue that the BoE is becoming a bit more hawkish in its monetary policy stance. Hence, if the number prints higher than expectations then the Cable could shoot higher. Meanwhile, if the CPI drops below 3% the Cable could take a near-term hit since part of the energy behind its drive higher was the recent vote for a 25bp hike in the benchmark rate.
Technically speaking, the Cable has multiple uptrend lines serving as technical cushions along with intraday lows and its highly psychological 1.50 level. As for the topside, the Cable faces technical barriers in the form of 6/29 and 7/8 highs.
Present Price: 1.5045
Resistances: 1.5046, 1.5066, 1.5081, 1.5101, 1.5124, 1.5143, 1.5168
Supports: 1.5028, 1.5008, 1.4987, 1.4961, 1.4944, 1.4929, 1.4912
Psychological: 1.50, July highs and lows
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