By Fast Brokers
The Cable exploded from our 2nd tier downtrend line and the psychological 1.60 level, darting to new annual highs on impressive volume. In fact, the volume compares to the action we saw during the bottom of the selloff in mid-January. Therefore, the GBP/USD is making a loud statement for its bull trend both fundamentally and technically. Meanwhile, the EUR/GBP is threatening to make a key bearish technical move, exemplifying the relative strength of the Pound right now. Britain’s PMI came in better than expected, continuing the theme of an overall uptrend in manufacturing and production. Britain’s economic data has outpaced both the EU and the U.S. over the past month and a half, and the Cable has reacted accordingly.
Meanwhile, the S&P futures are breaking out to new yearly highs, adding fuel to the fire of the uptrend of both the Cable and the EUR/USD due to their positive correlation with U.S. equities. However, as with the EUR/USD, we notice an upcoming zone of technical resistance which may result in some near-term consolidation. For the Cable, the next obstacle becomes October 30 highs, making the psychological 1.65-1.66 zone a possible area of consolidation. The GBP/USD has made quite a run as of late, and it wouldn’t be surprising to see some bulls cash in profits.
We’re going to see some more important economic data surface from Britain over the next few days leading up to Thursday’s interest rate decision. With the EU pretty quiet until Thursday, we could see the GBP/USD exert higher comparative volatility for the time being. Investors will watch for continued confirmation of a recovery in British economic data along with good news from the U.S. economy. Despite our anticipation of approaching consolidation, we maintain our bullish outlook on the Cable trend wise due to the incredible progress made fundamentally over the past week. The GBP/USD has left behind our key 2nd tier downtrend, meaning there is quite a bit of room to work with to the upside.
Fundamentally, we find resistances of 1.6388, 1.6462, 1.6522, 1.6587, and 1.6679. To the downside, we see supports of 1.6343, 1.6307 1.6233, 1.6170, and 1.6073. The GBP/USD is currently exchanging at 1.6386.
Market Commentary provided by Fast Brokers.
Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
