The Cable has managed to get back around its psychological 1.50 area following yesterday's large leg lower. A confident rate raise from the RBA has helped buoy the risk trade as yesterday's negative psychological forces cool. However, yesterday's downturn in the Cable was a loud statement and the UK's election/debt uncertainties certainly haven't disappeared. Hence, investors should keep an active eye on the UK and EU news wires during the European trading session. Today's UK Construction PMI did print a tad below analyst expectations, though this release doesn't seem to be having too much of an impact on the Cable. The Pound is still at a comparative disadvantage, reflected by the EUR/GBP's outbreak. Although the U.S. data wire is relatively quiet today, activity could pick back up tomorrow with the UK releasing its Services PMI and Halifax HPI data. The U.S. will also release its own Services PMI along with a much anticipated ADP Non-Farm Employment Change figure. However, investors should keep in mind that more emphasis is normally placed on Friday's headline number rather than tomorrow's ADP due to its unreliability. Regardless, volatility could kick back in, particularly with the BoE and ECB making their monetary policy decisions on Thursday. Investors will enter the BoE's meeting with a bit of uncertainty since the central bank's governors have been erring on the dovish side lately. Any surprise increase in QE could send the Cable reeling lower again since the Fed has maintained a neutral policy stance. Meanwhile, it will be interesting to see whether the Cable can garner enough strength to continue its consolidation around 1.50.
Technically speaking, we've formed some new uptrend lines for the Cable to compensate for yesterday's selloff. Our uptrend lines run through 4/30/2009 levels, or the 1.47-1.48 area. Hence, the Cable could continue to have support around this area over the near-term. As for the topside, the Cable faces multiple downtrend lines and faces an uphill battle.
Present Price: 1.4974
Resistances: 1.4974, 1.4994, 1.5013, 1.5038, 1.5071, 1.5112
Supports: 1.4938, 1.4917, 1.4877, 1.4850, 1.4822, 1.4799
Psychological: 1.50, March lows