By Fast Brokers – The Cable has taken a turn for the worse, hitting its psychological 1.52and dropping below 4/19 lows as EU uncertainty spread s to the UK. The fear of contagion in the EU pushed up bond yields across the union. Naturally investors have become concerned about the UK in the process due to the nation’s uncomfortable debt level. Additionally, election polls are all over the place with a hung parliament looking likely as May 6th approaches. The concept of fiscal contagion combined with the possibility of a hung parliament has worried investors that the new UK government will not be able to institute necessary austerity measures. The Cable has been whacked as a result and the currency pair will need to post a reassuring bounce soon to regain its poise. Both BBA mortgage approvals and CBI realized sales data points were negative yesterday, providing little relief for this troubled currency pair. Although the UK was quiet on the data wire today, all eyes will be focused on the Fed’s monetary policy decision. The Fed’s decision has the potential to really move the FX markets, particularly if the central bank changes its language concerning the time frame for its loose monetary policy. However, if the Fed keeps its policy as is the impact may be negligible. Regardless, investors should keep a close watch on how the greenback reacts to the Fed’s statement. The UK will also release Nationwide HPI tomorrow and there’s always the potential for a new development in the EU, meaning the next 24-48 hours could prove to be active.
Technically speaking, the Cable still has some uptrend lines serving as defense along with 4/6 and 3/31 lows. Additionally, the psychological 1.51 and 1.50 level could serve as solid technical cushions should they be tested. As for the topside, downtrend lines are now accumulating and the Cable also faces technical barriers in the form of 4/5, 3/17, and 4/26 highs. Furthermore, the psychological 1.53 level could serve as a solid barrier should it be reached.
Present Price: 1.5196
Resistances: 1.5209, 1.5223, 1.5237, 1.5249, 1.5265, 1.5279
Supports: 1.5190, 1.5180, 1.5164, 1.5141, 1.5122, 1.5101
Psychological: 1.53, 1.52, 1.51, 1.50, April highs and lows
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