By Fast Brokers – The Cable has propelled through our 3rd tier downtrend line on moderate volume as the greenback depreciates across the board. Investors are divesting from the dollar ahead of the Fed’s decision on monetary policy later today. Investors believe the FOMC remains in an adverse position in regards to its ability to reign in the large amount of liquidity circulating in the market place. Since the U.S. is more exposed monetarily than the rest of the globe, the Dollar is being punished by investors. The Pound is benefiting more than the Euro since a majority of Britain’s economic data continues to stream in at or above analyst expectations, including today’s CBI realized sales figure. The CBI data point met analyst expectations, showing that although the British consumer is still struggling, at least retail is declining at a more reasonable rate than before. However, the GBP/USD is mostly benefiting now from dwindling investor confidence in the U.S. Dollar.
Meanwhile, the Cable is attempting to leave behind our heavily weighted 3rd tier downtrend line, and is presently re-approaching previous June highs. If the GBP/USD can climb above June 3rd highs and our 1.6698 resistance, near-term gains could accelerate. Investors should keep a close eye on volume, for if volume matches excitement to the upside then the Cable’s uptrend could reactivate rather quickly. As for the downside, investors should keep a watch on U.S. economic data this morning followed by the conclusion of the FOMC meeting. If S&P and crude futures continue their downturn the GBP/USD may be inclined to follow suit due to their positive correlation. Volatility should increase today, and it is uncertain how the Dollar will react to the Fed’s decision. Regardless, the GBP/USD has made some encouraging moves to the upside over the past 24-48 hours, and we are tempted to reinitiate our positive outlook trend-wise on the Cable. A move above the aforementioned technical barriers would be a concrete move for the GBP/USD’s uptrend.
Present Price: 1.6569
Resistances: 1.6574, 1.6624, 1.6698, 1.6768, 1.6851
Supports: 1.6532, 1.6472, 1.6412, 1.6371, 1.6315 1.6263
Psychological: 1.65, 1.70
Market Commentary provided by Fast Brokers.
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