The Cable is consolidating after briefly trading beyond November highs on Monday. Investors are presently digesting the BoE Meeting Minutes released earlier today. The minutes revealed that although seven members of the BoE voted for the 25 billion Pound QE injection, one member vote for non-action and the other for a larger 40 billion Pound injection. Therefore, divisions of opinion may exist in the BoE in regards to present and future monetary policy actions, thereby increasing investor uncertainty a bit. However, if pricing data points, such as Tuesday's CPI and RPI, continue to rise while unemployment falls the BoE may choose a less dovish monetary policy stance in the future, thereby strengthening the Pound relative to the Dollar over the medium-term. U.S. data has been underperforming as of late and the Fed's loose monetary stance could be in place for quite some time. As for the time being, the Cable has had trouble breaking 11/09 highs and our 4th tier downtrend line. Meanwhile, the EUR/USD remains locked beneath its highly psychological 1.50 level. Therefore, the Cable has yet to receive the positive boost it needs to approach its own highly psychological 1.70 level.
Technically speaking, investors should continue to monitor the Cable's interaction with our 4th tier downtrend line since it runs through 11/09 highs. The GBP/USD faces light near-term historical resistance between present price and the psychological 1.70 level. In fact, we had to trace back to 2003 levels to find more substantial resistances. Hence, the Cable could be in for more extensive topside movements should fundamentals and U.S. equities cooperate. Speaking of which, investors received another wave of negatively mixed U.S. econ data and the S&P futures are having trouble creating some topside separation from their highly psychological 1.70 level. As a result, the economic fundamentals are not helping out the Cable's uptrend for the time being. However, Britain will release Retail Sales tomorrow along with Public Sector Net Borrowing. A positive Retail Sales number could help the uptrend's cause. Meanwhile, the Cable is continuing a consolidative pattern while slowly drifting back below 11/09 highs, meaning there's a potential for downward forces to kick in. As for the downside, the Cable still has multiple uptrend lines serving as technical cushions along with 11/16 and 11/12 lows. Furthermore, the psychological 1.65 level could work in the Cable's favor should conditions deteriorate.
Present Price: 1.6795
Resistances: 1.6808, 1.6828, 1.6849, 1.6875, 1.6896, 1.6913, 1.6935
Supports: 1.6778, 1.6753, 1.6730, 1.6694, 1.6664, 1.6615, 1.6594
Psychological: 1.70, 1.65 November and August Highs, November Lows