GBP/USD Pops on Fed and Obama

By Fast Brokers – The Cable is trading slightly below intraday highs after rallying in reaction to the Fed’s commitment to loose monetary policy in addition to a broad-based risk rally occurring during Obama’s State of the Union.  Volatility is really picking up and the FX markets are all over the place as investors digest data and psychological events.   Although U.S. Unemployment Claims printed higher than expected and Durable Goods disappointed, the Core DGO number surpassed analyst expectations.  Hence, even though unemployment remains at a high level consumers are pickup up more pricey, longer lasting goods excluding autos.  The U.S. will also release its Advance GDP, meaning investors will have more than enough data to sift through.  Meanwhile, the UK will print its Nationwide HPI data tomorrow, suggesting volatility in the Cable could pick up a bit.  It will be interesting to see how the currency pair reacts should HPI come in light considering the Pound is exhibiting a relative strength despite disappointing Prelim GDP and Realized Sales data earlier this week.  The Pound’s strength is highlighted by another large leg down in the EUR/GBP.  Investors should also keep an eye on gold as it battles to get back above its psychological $1100/oz level.  A breakout in either direction could bring the Cable along for the ride considering the two are normally positively correlated.

Technically speaking, the Cable made an encouraging move today by topping January 25 highs.  However, the currency pair is presently being negated by our multiple downtrend lines.  In addition to these downtrend lines the Cable also faces technical obstacles in the form of 1/20, 1/15, and 1/29 highs.  As for the downside, the Cable has multiple uptrend lines serving as technical cushions along with 1/27, 1/26, and 1/22 lows.  Considering the Cable continues to set higher lows the currency pair appears to have a solid near-term support system in place.  Furthermore, the psychological 1.60 could serve as a technical cushion should conditions deteriorate.

Present Price: 1.6243

Resistances: 1.6247, 1.6264, 1.6285, 1.6312, 1.6334, 1.6359

Supports: 1.6223, 1.6195, 1.6171, 1.6143, 1.6119, 1.6099

Psychological: 1.60, 1.65, January highs and lows

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