By Fast Brokers
The Cable continues to show relative strength on the back of surprisingly positive data surfacing from Britain over the past couple weeks. The GBP/USD kept its cool yesterday despite the broad selloff in U.S. equities and the Cable is running with the EUR/USD and U.S. equities Wednesday morning. We expect to see the Cable’s strength continue as long as Britain’s data outperforms and its major financial institutions stay out of the headlines. If U.S. equities and the EUR/USD head north today, the GBP/USD should follow. On the other hand, if U.S. equities selloff again, we may see the Cable hold up once more. However, we can’t forget the importance of the financial industry to Britain’s economy. Therefore, if U.S. banks hit another roadblock, the GBP/USD may have no choice but to head lower. Speculation set aside, the Cable is in great shape for the time being. It sits comfortably above our 1st tie uptrend line with no downtrend line in sight. On the other hand, the failure of the GBP/USD to eclipse February highs and 1.50 is a cause for concern, and we’ll keep this in mind. If the Cable can climb back above March highs today we could see a nice short-term pop. Even though Britain is quite on the news front today, the Pound could come alive tomorrow with a PPI release coupled with a BOE rate decision. Analysts are expecting the BOE to hold the benchmark rate at .50%. Fundamentally, we maintain resistance of 1.4730 with additional resistances hanging at 1.4770, 1.4834, 1.4883 and 1.4946. The 1.50 level serves as a key psychological barrier while the 1.45 area acts as a psychological cushion. To the downside, we hold our supports of 1.4676, 1.4612, 1.4571, 1.4538 and 1.4484. The GBP/USD is currently exchanging at 1.4702.
Market Commentary provided by Fast Brokers.
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