By Fast Brokers – The Cable is registering exciting gains after locking in on the inflection point of our 2nd tier uptrend and 3rd tier downtrend lines. The GBP/USD was denied by our 3rd tier downtrend line on three previous attempts, and finally broke through on the fourth go around. The Pound’s exertion of a relative strength is paying dividends as the GBP/USD aims for previous July highs. This is a very bullish move by the GBP/USD, and there are not many barriers left standing in the Cable’s way of 1.70. Meanwhile, the GBP/USD has separated itself from 1.65 while volume rises to the upside. We notice similar, large movements in both gold and the EUR/USD, confirming the weight of today’s breakout. However, the GBP/USD may opt to top out today beneath previous July lows since next week is Britain’s turn to highlight economic data headlines. Investors may want to see how upcoming economic data fares, and possibly the BOE’s monetary policy decision before making a full commitment to 1.70.
Britain will kick off next week with its Halifax HPI and Manufacturing PMI data points. Investors will be looking for continual improvement in Britain’s housing market, confirming yesterday’s positive Nationwide HPI and last week’s better than expected BBA Mortgage Approvals data points. Investors will be paying particularly close attention to the data points leading up to Thursday’s BOE monetary policy decision. More positive signs in economic data may lead investors to believe that the BOE won’t touch its QE package, a good sign for the GBP/USD. However, negative data points could have the opposite effect. However, economic data has already made enough encouraging developments in unemployment and housing, leading us to believe that the BOE meeting will adjourn on a positive note. Either way, investors will likely trade on the rumor before the BOE makes its decision.
Regardless of fundamentals, the GBP/USD is making a technical bull charge today. Our 3rd tier downtrend line is the final near-term downtrend line for quite a while, meaning the Cable could have a good amount of room to run. However, such moves can often get overextended, meaning the currency pair should log a healthy consolidative pullback sometime in the near-future. We can’t find too many negative things to say about the Cable’s technicals, usually a positive sign.
Present Price: 1.6661
Resistances: 1.6662, 1.6684, 1.6739, 1.6864, 1.6969
Supports: 1.6624, 1.6600, 1.6563, 1.6532, 1.6506
Psychological: 1.70, 1.65
Market Commentary provided by Fast Brokers.
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