The Cable has deteriorated faster than we anticipated, blowing right past the psychological 1.60 level with little hesitation. The GBP/USD has proceeded to decline below June 8th lows, a significant negative technical development in our eyes. The Cable appears to be committing to a more protracted downtrend pattern. Though the Cable could opt to try and consolidate around the psychological 1.60 area to salvage an uptrend, there is a lot of space between our 3rd uptrend and our 1st-2nd uptrend lines (off-grid). Therefore, losses have the potential to accelerate further over the near-term. In fact, we predict a medium-term decline towards 1.50 could be in the works. As for the topside, the Cable faces multiple downtrend lines along with Friday highs and the highly psychological 1.60 level. Economic data from Britain and the U.S. over the next week should determine the GBP/USD pieces together a near-term consolidation or continues its rapid descent towards our 2nd tier uptrend line.
Britain will make a return to the data circle tomorrow by releasing its Current Account, Final GDP, CBI Realized Sales, etc. Brtain was relatively quiet on the data front last week despite the Cable's decline, meaning volatility could remain at a heightened state over the next 24-48 hours. The latest employment and consumption data from Britain indicated a cool down in the economic recovery. Further deterioration in consumption, lending, and trade would likely drag the GBP/USD lower. Since BoE Governor King has stuck to his dovish monetary policy stance, we believe Britain's Current Account data could indicate a noticeable decline in UK exports. The U.S. will release consumption data of its own tomorrow along with industrial production from Japan. If we see a continuation of the theme of a global economic cool down U.S. equities will likely get whacked, a negative indicator for the GBP/USD. Since our outlook concerning the health of the global economic is darkening, we have even fewer reasons to be positive on the Cable other than the concept of oversold conditions. Therefore, we maintain our negative outlook on the Cable trend-wise even if bottom-feeders help the currency pair consolidate over the immediate-term.
Present Price: 1.5825
Resistances: 1.5847, 1.5871, 1.5921, 1.5950, 1.5978
Supports: 1.5813, 1.5780, 1.5751, 1.5726, 1.5672