Both the Cable and the EUR/USD are making a commitment to their respective uptrends today after finishing the week on an indecisive tone. Investors are showing a clear preference for riskier investment assets despite U.S. unemployment data printing worse than expected on Friday. Investors are being encouraged by the G20 statement from this weekend's meeting in favor of continued loose monetary policies until the global economy is on a better footing. Such solidarity is boosting investor confidence since the latest central bank meetings were ripe with speculation. Speaking of which, the BoE's decision to inject 25 billion into QE as opposed to the expected 50 billion is helping fuel the Cable's topside breakout. Furthermore, investors should keep in mind that both Britain's Services and Manufacturing PMIs are outperforming, showing that the economy is recovering nicely despite the poor Prelim GDP.
Technically speaking, the Cable has responded by charging well beyond our previous downtrend line running through August highs. Therefore, the Cable is indicating that a continued topside breakout towards the August highs and the psychological 1.70 level may be around the corner. As for the downside, we've readjusted our uptrend lines to compensate for today's positive movements. That being said, the GBP/USD still has multiple uptrend lines serving as technical cushions along with 11/6 and 11/5 lows, not to mention the psychological 1.65 level is no working in the currency pair's favor.
Meanwhile, gold has broken past its psychological $1100/oz level, another positive catalyst for the Cable considering the precious metal's negative correlation with the Dollar. Additionally, the S&P futures are trading higher by nearly 1% pre-market while the EUR/USD tests our key 3rd tier downtrend line and its psychological 1.50 level. Hence, the Cable's correlations are creating an environment supportive of further broad-based Dollar weakness. Britain will release its Trade Balance data tomorrow, and analysts are expecting a slight improvement from the previous number considering the encouraging PMI data as of late.
Present Price: 1.6791
Resistances: 1.6797, 1.6812, 1.6830, 1.6847, 1.6876
Supports: 1.6761, 1.6730, 1.6714, 1.6688, 1.6662, 1.6621
Psychological: 1.65, August Highs