The British pound is still holding most of its last week gains versus the greenback despite the current easing of the risk apatite in the first US trading session of this week which lead it to ease back to these current levels after it could break its recent resistance versus the greenback by the end of last week at 1.5883 reaching 1.5899 despite the contraction of UK Q4 GDP by 0.2% q/q as it was expected growing yearly by 0.7% while it was expected to show yearly growth by 0.8% and also the preliminary slump of UK quarterly total business investment by 5.6% which it was expected to show decreasing by just 0.7% after rising by 1% in the third quarter of last year following strong rising in the second quarter by 11.6% showing the strong need for the current QE plans of BOE.
God Willing, the markets are waiting ahead today for the voting results on the second bailing out plan of Greece in the germane parliament and later this week for the next EU summit meeting which is expected to discuss the issue of rising the EFSF amount under the pressure of the G20 recent meeting demand for trusting in funding the IMF efforts to help Europe to get over its debt problems.
while the cable is expected to face resistance now again at 1.593 which is still containing its previous rising from 1.5231 until now and the breaking of it can lead to facing the psychological level at 1.6 which can be followed by another resistance a 1.6091 before 1.6128 and 1.6164 while the way down can be met by important supporting level at 1.564 which could contain another falling of it last week following the minutes release of the recent MPC meeting on the 9th of this month which have shown voting in favor of increasing BOE's assets purchasing plan by Stg 75 Bln by its members miles and Posen while the other 7 members were preferring increasing by just Stg 50 Bln to not increase the current markets worries about UK economy and the current pressure on it amid the easing of the global economic growth pace and the EU debt crisis negative impacts on the economy which dampened the confidence in the business spending and consuming spending.
But the British pound could succeed to rise again underpinned by the rising of the risk appetite which has been fueled by increasing of the market certainty about the European funding of the Greek debt by the issuance of the second bailing out plan choosing helping Greece over letting it to the defaulting and its consequences and so, the pressure came back on the greenback helping the cable to form a second bottom above 1.564 giving its technical support to rise while breaking 1.564 was supposed to lead to meeting another supporting level at 1.5515 which can be followed by another one at 1.5449 before 1.5319 which breaking it can lead to 1.5231 again.
FX Market Strategist
Walid Salah El Din