The Cable is crashing after U.S. Core Durable Goods Orders data came in two basis points below analyst expectations, countering the positive U.S. consumer sentiment data we've received lately. The GBP/USD is bearing the brunt of the sell-off since Britain won't re-enter the economic data news stream until tomorrow's Nationwide HPI and CBI Realized Sales releases. The data releases couldn't come at a better time since the Pound has suffered a relative weakness among its peers since the BOE's surprise injection of liquidity. Investors should keep in mind Britain's economic data was coming in strong prior to the BOE's monetary shock, so we are operating under the belief that tomorrow's heavily-weighted British data could help buoy the Pound. However, negative data releases from Britain may only exacerbate the Cable's present selloff.
It seems the BOE may be getting what it wanted after all, a depreciation of the Pound. We believe the BOE was concerned the rapid appreciation of the Pound would place its companies in a competitive disadvantage and stymie Britain's economic recovery, hence the use of a monetary shock. The Pound has responded by selling off sharply against both the Dollar and the Euro. The GBP/USD seems to have given up on its psychological 1.65 level, dropping through 8/17 and 6/23 lows in the process. The Cable is presently hoping to find a bottom along our 2nd tier uptrend line. If this uptrend line doesn't hold, the GBP/USD will look to our 1st tier uptrend line and July lows for technical support along with the highly psychological 1.60 level. Hence, even though the present pullback may have some room to go, there are a few strong supports waiting in the wings. As for the topside, there are multiple barriers beginning with our 1st and 2nd tier downtrend lines.
Present Price: 1.6203
Resistances: 1.6224, 1.6251, 1.6286, 1.6324, 1.6367
Supports: 1.6187, 1.6163, 1.6114, 1.6093, 1.6056
Psychological: 1.60, 1.65