By Fast Brokers – The Cable has capsized beneath previous September lows on heavy sell-side volume. BoE Governor King didn’t take long to return to his dovish stance. Today Governor King confirmed our suspicions that the BoE is supportive of a weak Pound in order to make its service and manufacturing goods more attractive to international demand. Therefore, it seems the BoE will continue to take actions necessary to keep the Pound weak in order to boost demand for its goods and services while buoying Britain’s employment market. King’s comments are rocking the Pound once again, sending the GBP/USD tumbling while shooting the EUR/GBP closer to par. Our near-term outlook on the GBP/USD has been justified, and the GBP/USD is on the brink of sacrificing some important technical supports. The Cable is quickly approaching July 2008 lows and the highly psychological 1.60 level. Though 1.60 should ideally serve as a heft psychological cushion, the Cable’s uptrend lines are wearing thin. Therefore, the GBP/USD only has a few more strings to pull before registering even more significant losses than we’ve witnessed thus far. However, before we get ahead of ourselves, investors should key in on our 1st-3rd uptrend lines along with 1.60.
Meanwhile, U.S. and EU economic data releases certainly aren’t helping the GBP/USD’s uptrend. The S&P futures are taking a hit today after Existing Home Sales registered a surprising deterioration. Additionally, Germany’s Ifo Business Climate came in shy of analyst expectations, joining Wednesday’s negatively mixed EU PMI releases. Looking to commodities, crude has crashed below our 1st tier uptrend line and gold has darted beneath $1000/oz. While the S&P futures, gold, and the EUR/USD have some more uptrend lines to salvage the near-term uptrend, the overall downtrend of the Dollar is facing a considerable challenge. Therefore, investors should eye important technical supports in all of the Cable’s correlations. Though Britain won’t be releasing any more econ data this week, we will receive a wave of important numbers from the U.S. If U.S. data disappoints and the S&P’s 1st tier uptrend line fails, the GBP/USD’s downturn may exacerbate. On the other hand, positive U.S. econ data could help break the Cable’s fall and help the currency pair stabilize. Additionally, investors shouldn’t overlook the encouraging decline in today’s weekly Unemployment Claims release. We maintain our negative outlook on the GBP/USD trend-wise, though 1.60 and July 2008 lows should serve as reliable immediate-term supports should they be tested.
Present Price: 1.6082
Resistances: 1.6091, 1.6117, 1.6139, 1.6158, 1.6181, 1.6203
Supports: 1.6049, 1.6030, 1.6008, 1.5978, 1.5951, 1.5921
Psychological: 1.60
Market Commentary provided by Fast Brokers.
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