The GBP/USD has managed to fight off the dovish statements from the BoE's King, stabilizing around the psychological 1.65 level as global equity markets rally. Yesterday we saw large rallies in the EUR/USD, gold, and U.S. equity markets. The Cable's positive correlations pulled the currency pair out of its intense pullback. However, there remains a negative drag on the Cable which likely won't reverse any time soon considering Britain will be very quiet next week on the economic data front. On the other hand, Britain's pricing and CCC data came in just ahead of expectations this week, helping counteract Governor King's latest monetary shock. As investors know, King stated the BoE is considering lowering the deposit rate paid on the bank reserves, thereby encouraging lending and increasing liquidity in the monetary system. King's latest dovish statement follows the BoE's decision to surprise investors by injecting more funds into its QE package at the last monetary policy meeting. The BoE's relentless favoritism of liquidity worries investors that Britain's economy may not be on as solid of footing as we are led to believe by the performance of econ data and equities. King's dovish attitude is having its intended consequences, holding down the Pound as the Dollar depreciates heavily across the board and gold climbs towards 2008 highs. Therefore, even if current trends continue, the GBP/USD may only participate half-heartedly since the currency pair has downward inclinations. We would not be surprised to see the GBP/USD experience further downward pressure over the near-term once investors take profits from risk-oriented investments.

Meanwhile, the Cable is back above 1.65, a comforting development for bulls. However, the GBP/USD faces all three of our downtrend lines along with 9/15 and 9/11 highs. Our 3rd tier downtrend line serves as a key barometer for a meaningful near-term uptrend in the GBP/USD since the line connects through August highs. Our 1st tier downtrend and 3rd tier uptrend lines are reaching an inflection point right now, indicating the possibility of heightened volatility in the currency pair over the next 24 hours. A pop to the topside would likely run to our 2nd tier downtrend line whereas a pullback would find support in our 2nd tier uptrend line. The GBP/USD should take its cue from the broad-based performance of the Dollar and U.S. equities since Britain's data news wire will be silent next week. We maintain our negative outlook on the GBP/USD trend-wise and the Pound should continue to underperform for the time being.

Present Price: 1.6511

Resistances: 11.6524, 1.6551, 1.6570, 1.6595, 1.6622

Supports: 1.6495, 1.6475, 1.6455, 1.6431, 1.6402, 1.6382

Psychological: 1.65

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