By Fast Brokers
The Cable continues its impressive climb on rising volume despite slightly worse than expected RPI and CPI data points. The pricing numbers were only one basis point below analyst expectations, so the decline wasn’t too much of a surprise. This was the first negative data release we’ve seen from Britain over the past month, and the momentum remains clearly to the upside. The Cable is trading well above our downtrend line. In fact, it’s becoming a non-factor, as is the key psychological 1.50 level. The psychological 1.55 area becomes more of a relevant discussion at this point. Speaking of 1.55, the GBP/USD is also trading near November 26 highs, indicating we could witness some near-term consolidation. Near-term technical obstacles are in play for the EUR/USD as well with the S&P futures battling 900. Hence, all three investment vehicles are sending the same message of near-term struggle with slight downward pressure.
The Cable has climbed above January ’09 highs. The next two obstacles for the GBP/USD are the aforementioned November 26 highs followed by December 17 highs. From here we could witness a nice pop towards our last resort downtrend line, which is off screen but sitting around 1.60 right now. If the Cable can get on top of this downtrend line we could witness exciting near to medium-term gains. However, we still have a ways to go.
We maintain our bullish outlook on the GBP/USD due to the overwhelmingly positive economic data surfacing from Britain over the past month. We’ve seen improvements across the board, from employment to manufacturing to housing prices. We’re witnessing the massive depreciation of the Dollar analysts have warned us about after America’s incredible liquidity measures. However, as with the EUR/USD, the Cable’s ultimate performance is highly reliant upon U.S. equities. Therefore, any collapse in the S&P could be accompanied by a depreciation of the Pound. Fortunately for bulls, the S&P futures still have their upward momentum trend-wise. Investors will be paying particularly close attention to British retail sales on Thursday followed by Revised GDP on Friday to make certain the data supports the positive numbers we’ve seen as of late.
Fundamentally, we find resistances of 1.5551, 1.5600, 1.5663, 1.5717, and 1.5794. To the downside, we see supports of 1.5449, 1.5372, 1.5279, 1.5207, and 1.5134. 1.50 serves as a key psychological cushion with 1.55 acting as a psychological barrier. The GBP/USD is currently exchanging at 1.5492.
Market Commentary provided by Fast Brokers.
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