The Cable has recovered nicely from December lows and strengthened earlier today following an encouraging data set. Britain’s Manufacturing PMI, Net Lending to Individuals, and Mortgages Approvals data all printed stronger than expected, an encouraging sign for the Pound ahead of Thursday’s BoE monetary policy meeting. However, at its previous meeting the BoE did imply that it would likely take a wait-and-see approach in regards to inflation before deciding whether to take action monetarily. Therefore, should the rest of this week’s UK economic data print positively the BoE would be encouraged to keep its monetary policy unchanged before February’s meeting. Speaking of economic data, tomorrow the UK will release its Halifax HPI figure followed by Services PMI data on Wednesday. The Services PMI number should garner additional attention since the services industry comprises a majority of the UK’s GDP. Meanwhile, investors will be eyeing America’s ISM Manufacturing PMI report coming later today. A stronger than expected U.S. Manufacturing PMI number could take a bite out of the Cable’s intraday gains as investors favor the Dollar again. However, weak U.S. data would be another reason for investors to snap up the Cable and could lead to a test of 12/11/09 highs.
Technically speaking, the Cables pop back above its psychological 1.60 level is an encouraging sign considering the extent of December’s pullback. That being said, the Cable does have a downward force at play until the currency pair can overcome a few more topside barriers. The Cable faces multiple downtrend lines along 12/11, 12/16, and 12/7 highs. Furthermore, the psychological 1.65 level could serve as a topside obstacles should it be tested. As for the downside, the Cable now has multiple uptrend lines serving as technical cushions along with intraday, 12/23, and 12/30 lows. Additionally, the psychological 1.60 level could serve as a sturdy support should it be tested.
Present Price: 1.6155
Resistances: 1.6164, 1.6185, 1.6204, 1.6240, 1.6266, 1.6289
Supports: 1.6134, 1.6105, 1.6075, 1.6050, 1.6024, 1.5976
Psychological: 1.60, December highs and lows