The Cable is climbing towards our important 3rd tier downtrend line and the psychological 1.65 level after earnings from U.S. bellweathers surpassed analyst expectations. The combination of impressive earnings and recent positive GBP data has given investors enough incentive to continue the Cable's amazing run. The currency pair is now facing our important 3rd downtrend line which we highlighted in our previous commentary. Our 3rd tier runs through September highs, meaning its demise could signal another bull run for the Pound. Additionally, our new 4th tier downtrend line isn't too far above. The 4th tier runs through August highs, showing the Cable is ultimately knocking on the door of a potential run towards the psychological 1.70 level. Despite the Cable's present strength, we've seen runs like this before only top out just below their critical downside technicals, only to revert to their previous trend. Hence, we are reserving our optimism until the GBP/USD can break through these aforementioned technical walls. Regardless of topside barriers, the Cable has quickly established quite a few technical cushions during its present run, beginning with our 2nd-4th uptrend lines and 10/19 lows.

It is a bit ironic that BoE Governor King will be addressing the general public this afternoon EST. We're certain King is fully aware of the important near-term technical position of the Cable at present. As we've seen before, King is not afraid to play psychological games with investors to influence the near-term value of the Pound. Hence, we would not be surprised to see Governor King attempt to subdue investors by quelling hopes of a reversal from his notoriously dovish monetary stance. Therefore, King may be a bit aggressive during his public address, meaning investors should be wary of higher volatility. Disappointing PPI data from both the U.S. and Germany today could further motivate for King to stick to his guns. Another incentive to keep psychology contained is the wave of economic data flowing from China late Wednesday EST. We suspect China will top forecasts once again, providing further motivation for investors to head for the riskier investment vehicles. Therefore, King has more than enough reasons to keep the Cable bulls in check. After all, British data has only recently turned positive, and the BoE likely wants more confirmation concerning the recovery in the nation's service sector and unemployment. On the other hand, now would be an opportune time for the BoE to support the idea of a stronger monetary policy, so we will have to see how the news pans out.

Meanwhile, investors should keep a close eye on the interaction of the Cable with our 3rd and 4th tier downtrend lines along with the psychological 1.65 level. The GBP/USD is on the cusp of a more substantial breakout, and it will likely be up to Governor King whether to play ball or not.

Present Price: 1.6465

Resistances: 1.6486, 1.6515, 1.6547, 1.6570, 1.6590, 1.6625

Supports: 1.6431. 1.6395, 1.6372, 1.6348, 1.6323, 1.6266

Psychological: 1.65