The Cable has stabilized nicely after Friday's sizable selloff. The GBP/USD has popped back above its psychological 1.65 level and 11/12 lows as the currency pair benefits from a positive wave of EU and U.S. econ data. The set of Flash EU PMI data and U.S. Existing Home Sales came in altogether positive, and the S&P futures have responded by knocking on the door of previous 2009 highs. Meanwhile, gold has surged beyond its psychological $1150 level and is trading around $1170/oz at the moment. Hence, the Cable's correlative forces are helping buoy the currency pair after testing our 2nd tier uptrend line. Our 2nd tier uptrend line carries some weight since it runs through previous November lows. Therefore, a failure of our 2nd tier could imply a more extensive retracement towards 1.63. However, today's strength in the Cable has created some breathing room and now has multiple uptrend lines serving as technical cushions along with the psychological 1.65 level once again. As for the topside, the GBP/USD still faces multiple downtrend lines 10/23 and 11/18 highs. Hence, the Cable seems to have its work cut out for it to the topside.
Britain will re-enter the data wire tomorrow with the release of BBA Mortgage Approvals and Prelim Business Investment. Last week's discouraging outlook from Nationwide and Bloomberg in regards to the outlook for Britain's housing market in 2010 could place a little more weight on tomorrow's Mortgage Approvals number. However, investors will likely be paying more attention to Britain's Inflation Report Hearings. The last BoE monetary policy vote revealed a bit of disagreement, thereby stirring up some investor uncertainty. On the other hand, if tomorrow's inflation report signals encouraging developments in Britian's inflationary outlook, then the BoE may be more inclined to apply a bit more of a hawkish monetary stance. Regardless of the outcome, tomorrow's fate of the U.S. Dollar may rest on the shoulders of the U.S. Prelim GDP release. A positive Prelim GDP number could entice investors to put some more money to work in riskier asset classes, thereby devaluing the Dollar and benefitting the Cable, and vice versa. Therefore, investors should keep a close eye on America's GDP number since it could prove to be a market mover.
Present Price: 1.6624
Resistances: 1.6636, 1.6664, 1.6694, 1.6730, 1.6761, 1.6794, 1.6851
Supports: 1.6605, 1.6571, 1.6527, 1.6489, 1.6457, 1.6427, 1.6398
Psychological: 1.65, November Highs and Lows, 1.70