The Cable has managed to hold up well above our 2nd tier uptrend line despite recent strength in the Dollar. Investors were encouraged by yesterday's positive CBI Realized Sales data considering the damage brought upon the Cable by Friday's disappointing Prelim GDP data. The CBI release has allowed the Cable to consolidate with a slight upward bias and the currency pair has managed to salvage its near-term uptrend in the process. Additionally, today's U.S. Core DGO data is helping buoy stocks about. However, the positive DGO showing is being negated by yesterday's CB Consumer Confidence number along with the discouraging New Home Sales data that just printed. Therefore, U.S. data continues to be negatively mixed. The reason we're speaking of the U.S. today is because this week is mostly about tomorrow's Advance GDP data. The S&P futures have drifted below our key 1st tier uptrend line and are presently testing their psychological 1050 level. Therefore, tomorrow's GDP data could determine whether the S&P is on a path to test 1000, or on a path towards stabilization. The reason the S&P is so important right now is due to the Dollar's negative correlation with U.S. equities. Any extensive losses in U.S. equities coupled with rising investor uncertainty usually leads investors towards the Dollar for safety. Therefore, investors should keep a sharp eye on the S&P's interaction with our technical levels and reaction to econ data over the next 24-48 hours.
Technically speaking, is facing multiple downtrend lines while the psychological 1.65 level hangs overhead. Meanwhile, our trend lines are approaching multiple inflection points, supporting our expectation of higher volatility. The GBP/USD's last run topped out beneath 9/11 highs, meaning the currency pair has its work cut out for it to the topside since a reversal into a longer downtrend isn't out of the question. As for the downside, the Cable has managed to avoid a retest of 9/21 lows thus far. Our 2nd tier uptrend line should play an important role in preventing such an occurrence. Meanwhile, though far away, the Cable still has our 1st tier uptrend line to fall back on along with the psychological 1.60 level and previous October lows should the situation deteriorate further. Therefore, the Cable's uptrend is salvageable as long as near-term technical cushions hold up.
Present Price: 1.6350
Resistances: 1.6352, 1.6371, 1.6395, 1.6431, 1.6454, 1.6491
Supports: 1.6304, 1.6285, 1.6265, 1.6247, 1.6233, 1.6205
Psychological: 1.65, 1.60