The Cable is under considerable selling pressure today, tumbling below previous February lows amid relative weakness as highlighted by another leg up in the EUR/GBP. It’s difficult to pinpoint the reason driving the Pounds dive lower. Although Prelim Business Investment printed far below analyst expectations, CBI Realized Sales came in strong. Therefore, the force driving the Pound lower could be fears of the UK’s ties with Greece’s debt. In the past there were rumors circulating that some UK financial institutions have sizable exposure to Greek debt. However, this is merely speculation with no grounds. Hence, we’ll have to wait and see what reasoning there is behind the Pound’s tumble. Considering several psychologically negative news stories have surfaced concerning Greece today, a belief that the Cable’s tumble is associated with troubles in the EU may not be so far-fetched. The S&P and Moody’s warned that they may downgrade Greece’s debt should the government not successfully implement its rescue package. Additionally, Greek government officials have made provocative statements towards Germany, raising fears that the EU will not bail out Greece should its fiscal situation deteriorate further. In addition to fresh uncertainty in Greece, the U.S. released a disconcerting weekly unemployment claims figure while durable goods printed mixed. Negative fundamental developments aren’t proving to be too helpful for the risk trade, placing additional downward pressure on the Cable. Meanwhile, it will be interesting to see if the Cable can stabilize ahead of tomorrow’s UK Revised GDP and HPI data. The U.S. will also release its Prelim GDP data, meaning the FX markets could end the week on a volatile note.
Technically speaking, the Cable has multiple downtrend lines serving as technical barriers along with intraday, 2/24, and 2/23 highs. Additionally, the 1.55 level could serve as a technical barrier should it be tested. As for the downside, the Cable has multiple uptrend lines serving as technical cushions along with intraday lows.
Present Price: 1.5277 Resistances: 1.5290, 1.5317, 1.5348, 1.5365, 1.5390, 1.5416 Supports: 1.5253, 1.5235, 1.5195, 1.5171, 1.5145, 1.5126 Psychological: February lows, 1.55, 1.53