By Fast Brokers – The Cable added onto recent strength by propelling off of our 1st tier uptrend line after Britain’s Services PMI printed ahead of analyst expectations. A piece of positive data was surely welcomed by the Pound bulls considering all of the weak numbers as of late. The data was particularly reassuring since services comprise a large portion of Britain’s GDP, more so than manufacturing. The Pound’s relative strength is highlighted by the sharp contraction in the EUR/GBP. The EUR/GBP’s run has come to an abrupt halt and investors continue to snap up an oversold Pound. Britain’s Halifax HPI will be printing tomorrow along with key U.S. unemployment data and the kickoff of the G20 Summit. While we expect a strong HPI number from Britain, the U.S. unemployment data may disappoint. However, this week’s discouraging data from the U.S. may soften the blow should the headline Unemployment Rate come in higher than expected.
As we explained in our EUR/USD analysis, the G20 Summit could prove to be the wildcard jolting the FX markets from their consolidative pattern. Such an effect would require China bringing the topic of a new monetary standard back to the forefront. With Chinese equity markets shaking and FX markets in a dazed state, now could be an opportune time for China to bring the topic of conversation to a larger stage. Such an event would surely rattle the FX markets. The GBP/USD and EUR/USD both have multiple inflection points approaching, indicating volatility could return soon. However, this is purely speculative conversation and we are simply thinking aloud. Odds are the G20 nations will exit the conference with a unified message in the hopes of maintaining global economic stability.
Technically speaking, the Cable is fortunate to have found support in our 1st and 2nd tier uptrend lines. If not, we would have surely witnessed a retest of the highly psychological 1.60 level. Not to mention our 1st tier trend line is sitting in the depths below. While the GBP/USD has 1.60, the EUR/USD has 1.40. Therefore, even though there may be some more space to the downside, each major Dollar cross has a strong psychological level waiting in the wings. On the other hand, the GBP/USD has quite a ways to go to re-establish its upward momentum. The GBP/USD has to deal with our 2nd and 3rd tier downtrend lines along with the highly psychological 1.65 level. Therefore, there remains a consolidative with a slight downward bias.
Present Price: 1.6344
Resistances: 1.6360, 1.6376, 1.6408, 1.6443, 1.6469, 1.6520
Supports: 1.6324, 1.6300, 1.6267, 1.6239, 1.6212
Psychological: 1.65, 1.60
Market Commentary provided by Fast Brokers.
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