The Cable is under considerable selling pressure right now after the UK's Prelim GDP number printed 3 basis points below analyst expectations. Although BBA Mortgage Approvals came about in line, the setback in GDP has delivered another blow to the Pound, adding onto Friday's disappointing Retail Sales data. Therefore, it seems the improvement in UK employment has not carried through to GDP and consumption. Meanwhile, we recognize a pop in the EUR/GBP taking place, highlighted by a comparative weakness in the Pound. Additionally, the Pound is experiencing downward pressure from today's revelation that China's banks are being aggressive in terms of limiting the amount of new lows after the massive lending spree during the first couple weeks of the year. Tighter liquidity in China is a negative development for the global economic recovery as a whole since China has been an integral part of the turnaround. Therefore, we witnessed another wave of Dollar purchasing during the Asia trading session. Investors will now look forward to today's U.S. CB Consumer Confidence release. While a positive number would likely lead to further Greenback buying, it will be interesting to see what reaction the FX markets would have to another negative U.S. data point. Yesterday's disappointing Existing Homes number led to weakness in the Dollar, meaning a similar pattern could occur today. The UK will keep its data train rolling tomorrow with the release of its CBI Realized Sales. Investors will also digest U.S. New Home Sales and a monetary policy decision from the Fed. Hence, it wouldn't be surprising to experience continued volatility in the Dollar over the next few trading sessions.
Technically speaking, despite today's setback in the Cable the currency pair still has multiple uptrend lines serving as technical cushions along with 1/22 lows and the psychological 1.60 level should it be tested. As for the topside, the Cable faces multiple downtrend lines along with 1/04, 1/21 and 1/15 highs. Therefore, although the Cable's uptrend line has been dealt a blow today, the currency pair still has some wiggle room on both sides.
Present Price: 1.6130
Resistances: 1.6143, 1.6170, 1.6195, 1.6223, 1.6247, 1.6264
Supports: 1.6119, 1.6092, 1.6073, 1.6048, 1.6023, 1.6001
Psychological: 1.60, 1.65, January highs and lows