The Cable is tacking onto Friday's selloff backed by a pop in sell-side volume. Friday's weakness came on the heels of worse than expected British HPI data along with disappointing U.S. pricing and spending numbers. The EUR/GBP has been hit heavily recently, making today's pop in the currency pair and present relative weakness in the Pound warranted. The Cable is adding onto its losses today after a Bloomberg report signaled that many analysts expect the BoE to increase its QE package by 50 billion at its upcoming monetary policy meeting. Britain's recent negative Prelim GDP number sent shockwaves throughout the FX market, and analysts are expecting the BoE to react by loosening liquidity further. However, investors should keep in mind that we have seen some encouraging data from Britain lately, including today's impressive Manufacturing PMI number. Hence, positive results from tomorrow's Halifax HPI and Wednesday's Services PMI data points could change the present bearish tone. The Services PMI number should carry the most weight of the two releases since services comprise roughly 70% of Britain' GDP. The last release thoroughly trounced expectations, and analysts are expecting the indicator to remain around a respectable 55.4 level.

Meanwhile, the riskier investment vehicles sure could use a little boost from econ data since we are witnessing a flight to safety across the board. The S&P futures received large sell-side volume with Friday's sizable pullback beneath Wednesday lows. Hence, there remains a downward pressure on U.S. equities, meaning investors could continue to favor the Dollar since the Greenback and equities are normally negatively correlated. Therefore, investors should keep an eye on the S&P's reaction to upcoming econ data and Q3 earnings, particularly if we should witness a retest of October lows. The Cable should ultimately follow its positive correlation with U.S. equities despite its relative strength as of late, that is unless the BoE behaves surprisingly hawkish at this week's policy meeting. Overall, with key econ data and an abundance of monetary policy meetings we should be in for another volatile trading week.

Technically speaking, the Cable still has a couple uptrends to fall back on along with 10/28 and 10/26 lows. However, the currency pair is getting awfully close to our 2nd tier uptrend line, which may separate the GBP/USD from stabilization and a retest of the psychological 1.60 level. As for the topside, the Cable has multiple downtrend lines bearing overhead along with 10/20 and 10/30 highs. Additionally, the psychological 1.65 level serves as a technical barrier once again.

Present Price: 1.6346

Resistances: 1.6356, 1.6397, 1.6435, 1.6474, 1.6508, 1.6566

Supports: 1.6315, 1.6285, 1.6251, 1.6234, 1.6204, 1.6167

Psychological: 1.65, 1.60

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