By Fast Brokers – The Cable has posted a solid bounce today from yesterday’s lows after UK CPI and RPI came in hotter than anticipated. The persistent price growth taking place in the UK seems to be more than a temporary blip as the BoE implied a couple months ago. Hence, the Pound is outperforming the Euro since the BoE has less incentive to loosen than the ECB. In fact, if CPI remains this far above 3% after the election then the BoE may have to be more proactive, depending on the political environment. Regardless, King will have to write the government another letter explaining the central bank’s outlook on price movements. That being said, the Cable could hold up strong over the near-term since CPI above 3% implies that the BoE will not consider loosening at its next meeting. Meanwhile, the Cable is declining from intraday highs as the Dollar appreciates across the board in reaction to impressive earnings from Goldman. Hence, investors should keep an eye on the U.S. news wire since it seems bellweather earnings could have an influence over the Dollar for the time being. The UK will keep its data and news wires busy tomorrow with the release of the Claimant Count Change along with the BoE’s Meeting Minutes. The CCC registered a much larger than expected decline last month, so it will be intriguing to see how tomorrow’s release turns out. Should the CCC decline again this could benefit the Pound and push the Cable higher in anticipation that the UK’s unemployment rate will improve.
Technically speaking, the Cable has managed to avoid a retest of previous April lows thus far and has intraday lows along with its psychological 1.52 and 1.53 levels serving as technical cushions for the time being. As for the topside, the Cable faces multiple downtrend lines along with intraday, 4/12, and 4/15 highs. Additionally, the 1.54 and 1.55 levels could serve as a psychological barriers over the near-term.
Present Price: 1.5350
Resistances: 1.5371, 1.5386, 1.5404, 1.5419, 1.5435, 1.5453
Supports: 1.5341, 1.5325, 1.5292, 1.5278, 1.5263
Psychological: 1.55, 1.54, 1.53, 1.52, April highs and lows
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Market Commentary provided by Fast Brokers.
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