By Fast Brokers
The Cable continues its incredible run and is currently working to climb above our 2nd tier downtrend line and the psychological 1.60 level. Our 2nd tier downtrend line is a critical obstacle since it stretches back to July 2008 highs, forming our last foreseeable blockade for the medium-term. Hence, even though the Cable’s near-term gains have been impressive, we could witness even more exciting movements to the upside if the currency pair can clear the 2nd tier. Due to the significance of present levels, we wouldn’t be surprised to experience a little hesitation back around 1.60 as investors debate leaving the key resistance behind. We advise keeping a close eye on volume over the next couple sessions. A large up-bar backed by considerable volume could indicate a forthcoming breakout.
The Cable is riding high despite BBA Mortgage Approvals showing home purchases may not be picking up as quickly as investors hoped. Today’s BBA release reflects the same mixed message sent by yesterday’s Home Price Index release from the U.S. Therefore, the housing sector continues to be a sore thumb in both Britain and the U.S. Regardless, economic data from Britain has beat analyst expectations from almost every other economic standpoint over the last month. As a result, economic releases will have to disappoint for the next couple weeks for investors to change their optimistic attitude.
Investors are shrugging off the fact that Britain now has a 33% chance of losing its AAA debt rating. Hence, investors are sending a message that the U.S. is worse off concerning debt-exposure and monetary saturation induced by the massive injections of liquidity. As a result, we’re witnessing a broad-based devaluation of the dollar around the globe. The positive performances of both U.S. equities and Oil futures are only adding fuel to the fire with both the Cable and EUR/USD exercising their positive correlation with the S&P futures to the fullest extent. Investors will be keeping a close eye on economic releases over the next two sessions including Existing and New Home Sales, Durable Goods Orders, and weekly Unemployment Claims from the U.S. coupled with Britain’s CBI Realized Sales. We maintain our bullish outlook trend wise on the GBP/USD for the aforementioned reasons.
Fundamentally, we find resistances of 1.6062, 1.6129, 1.6233, 1.6307, and 1.6388. To the downside, we see supports of 1.5988, 1.5.5899, 1.5822, 1.5727, and 1.5662. 1.60 is becoming a psychological cushion with 1.65 acting as a psychological barrier. The GBP/USD is currently exchanging at 1.6032.
Market Commentary provided by Fast Brokers.
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