The Cable is experiencing a little selling pressure after briefly trading beyond November highs. The Cable added onto gains since our last post as the currency pair followed U.S. equities higher. Britain re-entered the news wire today with the release of CPI and RPI data. Both data points printed a basis point hotter than analyst expectations. As a result, the BoE has gained a little breathing room in regards to its upcoming monetary policy decision by avoiding a movement below 1%. Meanwhile, the U.S. released PPI data which came in short of analyst expectations. The most disconcerting number was the -0.6% Core PPI reading (minus food and energy). The -0.6% number is the weakest since November 2006, indicating the Fed's alternative liquidity measures haven't relieved deflationary pressures resulting from a decline in consumption. Today's negative pricing data further supports the Fed's decisions to maintain its loose monetary policy stance for the foreseeable future.

The positive pricing data from Britain combined with weak pricing data from the U.S. would normally lead investors to expect a decline in the Dollar. However, the Dollar as shown a muted reaction thus far as investors await additional U.S. economic data. On the other hand, the combination of British and U.S. pricing data is giving the Pound a bit of relative strength, as highlighted by a pullback in the EUR/GBP. Britain will release its CBI Industrial Order Expectations on Wednesday along with central bank meeting minutes. Investors will likely be paying close attention to the meeting minutes to see whether there are any hints in regards to the BoE's outlook for future monetary policy decisions and well as their opinion of the overall economy.

Technically speaking, the Cable's move beyond our 4th tier downtrend line could prove to be an important near-term move considering the trend line runs through 11/09 highs. The GBP/USD faces light near-term historical resistance between present price and the psychological 1.70 level. In fact, we had to trace back to 2003 levels to find more substantial resistances. Hence, the Cable could be in for more extensive topside movements should fundamentals and U.S. equities cooperate. However, the Cable has drifted back below 11/09 highs, meaning there's a potential for downward forces to kick in. As for the downside, the Cable still has multiple uptrend lines serving as technical cushions along with 11/16 and 11/12 lows. Furthermore, the psychological 1.65 level could work in the Cable's favor should conditions deteriorate.

Present Price: 1.6790

Resistances: 1.6808, 1.6828, 1.6849, 1.6875, 1.6896, 1.6913, 1.6935

Supports: 1.6790, 1.6730, 1.6694, 1.6664, 1.6615, 1.6594

Psychological: 1.65, 1.70, November and August Highs, November Lows

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