By Fast Brokers – The Cable is reacting negatively to the negative unemployment data points from both the U.S. and EU. Additionally, Britain’s construction PMI contracted from its previously release, coming in below analyst expectations. The positive sentiment the Pound has garnered over the past couple months has been dented by the disappointing GDP and current account data released earlier this week. Additionally, we’ve recently seen key British data points, such as today’s construction PMI number, take a step back from their recovery uptrend. Therefore, our 1.6212 support may be tested again due to the questions raised by mixed data points. Britain will release two more heavily-weighted data points tomorrow, including its services PMI and the Halifax HPI. While home prices will likely continue to improve, it will be interesting to see whether the services PMI can keep its uptrend going, or if it contracts like today’s construction PMI.
Meanwhile, the S&P futures are retesting 900 again and crude is logging large losses on climbing volume. Investors should take note since these two investment vehicles are negative correlated with the Greenback, or positively correlated with the Cable. If the S&P can’t hold onto June lows and crude experiences technically significant losses, the GBP/USD would likely follow suit. If our 2nd tier downtrend line doesn’t hold, we may see today’s pullback pick up pace towards our 1st tier uptrend line. We believe our 1st tier uptrend plays a key role in regards to the near-term direction of the Cable. Therefore, investors should keep a close eye on this area should it be tested. While volatility should remain at a heightened level today due to the news and the fact that it’s a holiday shortened week, we expect our 1st tier uptrend line to hold since investors will likely wait to see how the S&P behaves between 875-900. In the meantime, we maintain our neutral stance trend-wise on the Cable until the currency pair makes a clear break from either our 1st tier uptrend line or 3rd tier downtrend line.
Present Price: 1.6352
Resistances: 1.6405, 1.6446, 1.6449, 1.6553, 1.6602
Supports: 1.6323, 1.6278, 1.6245, 1.6212, 1.6183
Psychological: 1.65, 1.60
Market Commentary provided by Fast Brokers.
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