By Fast Brokers – The Cable is stabilizing today as investors take profits in the Dollar across the board. However, the Pound is exhibiting a relative weakness, as highlighted by a pop in the EUR/GBP. Weakness in the Pound likely stems from yesterday’s BoE Meeting Minutes, which indicated that the central bank is still cautious due to the disconcerting decline in the money supply. However, the BoE will continue to monitor the effectiveness of its current QE measures, meaning any action may be delayed until February’s meeting. On a positive note, all 9 BoE members voted in unison to keep the central bank’s monetary policy unchanged. Hence, all BoE members are on the same page with a wait-and-see approach. Meanwhile, the Cable will likely follow any broad-based moves in the Dollar due to the lack of UK economic data until next week’s Nationwide HPI release. That being said, investors should monitor the Greenback’s reaction to today’s U.S. Unemployment Claims and Durable Goods Orders releases. Should today’s U.S. econ data echo yesterday’s negative sentiment then investors may continue to lock-in gains on the Dollar, a positive catalyst for the Cable. On the other hand, should U.S. data print positively, investors may snap up the Dollar again and leave the Cable around December lows. However, activity should gradually cool down as the session progresses as investors check out for the Christmas holiday.
Technically speaking, the Cable’s large pullback this month has sent the currency pair below some key technical levels. Hence, it’s possible the Cable could be entering a more protracted downturn. The Cable has now dropped below our 2nd tier uptrend line with our 1st tier uptrend waiting far below (Off Chart). That being said, the fact we are now using March lows, or the 1.40 area, to create uptrend lines gives investors an idea of the extent of the damage inflicted by the Cable’s December pullback. Meanwhile, it will be interesting to see if the Cable can add onto intraday gains and gain some topside separation from 1.60. If not, the Cable does have some technical supports in the form of September and October lows. As for the topside, the Cable faces multiple downtrend lines along with 12/18 and 12/16 highs.
Present Price: 1.6001
Resistances: 1.6005, 1.6023, 1.6045, 1.6071, 1.6096, 1.6132
Supports: 1.5972, 1.5943, 1.5917, 1.5899, 1.5875, 1.5845
Psychological: 1.60, 1.65, September and October lows
Market Commentary provided by Fast Brokers.
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