By Fast Brokers – The Cable has broken through previous January highs as we witness weakness in the Dollar across the board. Strength in the Cable comes despite lighter than expected Manufacturing Production data which remained flat for the 2nd release in a row. However, investors should keep in mind that the UK’s economy is more serviced based, placing slightly less weight on today’s manufacturing data. That being said, data from the UK has been altogether solid the past couple of weeks and has allowed the Cable to post encouraging gains in the process. Meanwhile, investors are looking forward to tomorrow’s U.S. Retail Sales data. Considering this week’s U.S. Trade Balance data signaled an increase in imports, we could receive positive retail data tomorrow with a pickup in consumption. However, it remains to be seen whether an encouraging U.S. would release would have a positive or negative impact on the Cable. Investors should keep in mind that the Dollar strengthened in December in reaction to impressive U.S. economic data. Therefore, if tomorrow’s retail sales print positive, the Dollar may actually benefit as opposed to the risk trade. Also on the agenda for tomorrow is the ECB’s monetary policy meeting. Should the ECB alter its alternative liquidity measures or shift its monetary stance we could witness volatility across the board. Meanwhile, the UK should be relatively quiet on the wire, leaving the Cable’s movements up to the broad-based performance of the Dollar.
Technically speaking, the Cable’s rally beyond previous January highs is certainly a positive development. Furthermore, the Cable is creating some more breathing room between present price and the psychological 1.60 level in the process. However, the Cable still faces multiple downtrend lines along with 12/16 highs. As for the downside, the Cable has multiple uptrend lines serving as technical cushions along with 1/12 lows and the psychological 1.60 area.
Present Price: 1.6289
Resistances: 1.6318, 1.6340, 1.6360, 1.6379, 1.6407, 1.6440
Supports: 1.6238, 1.6201, 1.6184, 1.6151, 1.6125, 1.6088
Psychological: 1.60, 1.65, December highs and January lows
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