By Fast Brokers – The Cable is logging solid losses today despite yesterday’s encouraging data set. Today the UK did release a Construction PMI which was a bit weaker than expected. However, this data point alone doesn’t really explain why the Pound is exhibiting such a relative weakness, as highlighted by large gains in the EUR/GBP. Hence, there seems to be an external force driving the Cable lower outside of its Dollar correlation, and we can’t quite put our finger on it. It is possible investors are keeping the Pound in check around its psychological 1.60 level ahead of Thursday’s BoE meeting despite the fact the central bank is expected to keep its monetary policy as is until February’s meeting. Another possibility could be the crippling cold front moving through the UK at the moment which has brought much of Britain’s transportation to a halt. Whatever the reason, it will be interesting to see if the Cable can stabilize above 1.60 and 12/22 lows. Tomorrow could yield further volatility with the UK releasing its Halifax HPI and Services PMI data points. The Services PMI number will be in focus since the services industry comprises roughly 70% of the UK’s GDP. Also in focus will be the U.S. Non-Farm Employment Change figure. A turnaround in U.S. unemployment is what triggered the Dollar’s December rally. Therefore, tomorrow’s ADP number could prove to be a market mover.
Technically speaking, it seems the Cable’s psychological 1.60 level is serving as a technical cushion at the moment along with our 1st and 2nd tier uptrend lines. Furthermore, 12/22 and 12/30 lows could serve as solid technical supports should they be tested. As for the topside, the Cable faces multiple downtrend lines along with 1/04 and 12/16 highs. Therefore, the Cable has quite a few hefty obstacles to overcome to the topside considering the extent of December’s downturn.
Present Price: 1.6031
Resistances: 1.6058, 1.6085, 1.6107, 1.6141, 1.6163, 1.6195
Supports: 1.6024, 1.5995, 1.5973, 1.5928, 1.5901, 1.5876
Psychological: 1.60, December highs and lows
Market Commentary provided by Fast Brokers.
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