By Fast Brokers – The Cable has outperformed over the past 24 hours after investors reacted positively to a large increase in U.S. construction spending. The figure yielded a bounce in the risk trade across the board and the Cable seemed to benefit the most. With negative news emanating from China and the EU the Cable has started to look more attractive as investors search for places to put their money. Prime Minister Hatoyama resigned today, denting the Yen’s safe haven status. This could benefit the Pound over the near-term due to few investment options for investors. The UK’s manufacturing PMI registered a solid reading yesterday, allowing the Cable to rise amid a lack of news flow from Britain. The UK will release its construction PMI and net lending to individuals today, and positive readings from both of these data points could help buoy the Cable. However, attention will likely remain focused on the EU along with U.S. pending home sales data. Psychological forces are still in the driver’s seat, meaning investors should keep an eye on the news wire for any developments regarding China’s real estate market or the EU’s fiscal crisis. Meanwhile, the EUR/USD still seems to be on a downward trajectory, and further deterioration in the currency pair could drag the Cable lower.
Technically speaking, the Cable has been able to build off of the base establish from May lows and it will be interesting to see how long this pattern lasts. The Cable has supports in the form of the psychological 1.45 level along with 5/28 lows. As for the topside, the Cable still faces multiple downtrend lines due to the extent of its May crash. The Cable also faces barriers in the form of 5/13 and 5/12 highs. Additionally, the psychological 1.50 area could serve as a strong technical barrier should it be tested.
Present Price: 1.4671
Resistances: 1.4736, 1.4758, 1.4789, 1.4822, 1.4850, 1.4875
Supports: 1.4667, 1.4645, 1.4626, 1.4606, 1.4567, 1.4534, 1.4506
Psychological: 1.45, 1.50, May 2010 highs and lows
(click chart to enlarge)
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