{"id":2535,"date":"2009-06-18T12:43:17","date_gmt":"2009-06-18T17:43:17","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=2535"},"modified":"2009-06-18T12:43:17","modified_gmt":"2009-06-18T17:43:17","slug":"gbpusd-weakens-after-disappointing-cbi-data","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2009\/06\/18\/gbpusd-weakens-after-disappointing-cbi-data\/","title":{"rendered":"GBP\/USD Weakens After Disappointing CBI Data"},"content":{"rendered":"

By Fast Brokers<\/strong> – The Cable has pulled back to our 3rd tier uptrend line after investors reacted negatively to today\u2019s data from Britain.\u00a0 Most analysts are highlighting the report showing negative growth in retail sales over the past month.\u00a0 However, viewing the data from a more historical perspective, British retail sales tend to deviate from 0% in both directions during good and bad economic times.\u00a0 Additionally, the -0.6% decline we saw today is certainly a negative indicator, but nothing too abnormal.\u00a0 The more disconcerting data releases today were the M4 money supply and CBI industrial order expectations.\u00a0 The less than anticipated growth in the M4 money supply supports the concept of deflationary pressures, taking a bite out of corporate earnings in the process.\u00a0 Additionally, the industrial order expectations number is still at a shockingly low level.\u00a0 Therefore, orders aren\u2019t picking up as quickly as manufacturers would have hoped, indicating the global economy is recovering at a slow pace.<\/p>\n

Despite Thursday\u2019s disappointing showing so far, yesterday\u2019s releases showed considerable progress concerning Britain\u2019s fight against unemployment.\u00a0 The CCC is falling at an encouraging rate while average earnings are back in the green.\u00a0 If we continue to see a downtrend in CCC and uptrend in average earnings then retail sales should trend upwards as well.\u00a0 Therefore, even though the Cable is weakening today, we believe that Britain remains in an advantageous position economically as compared to the U.S. and EU.\u00a0 Even though we\u2019ve seen some negative pressure on the GBP\/USD lately, bulls continue to come to the defense of the currency pair, preventing the Cable from retesting 1.60 for the time being.<\/p>\n

However, should the S&P futures pull back further, the GBP\/USD would likely participate to a certain degree due to their positive correlation.\u00a0 Should near-term weakness in the Cable continue, the currency pair has considerable support between1.5850-1.60.\u00a0 Therefore, there would need to be a decisive turn to the downside in U.S. equities for the Cable to leave behind this trading range.\u00a0 This line of defense is represented by our 2nd tier uptrend line.\u00a0 The GBP\/USD is getting squeezed between our 3rd tier uptrend and 2nd tier downtrend lines as they approach their inflection point.\u00a0 We notice a similar inflection point in the EUR\/USD.\u00a0 If the Cable reacts negatively to the collision, we could view a pullback towards our 2nd tier uptrend line.<\/p>\n

That being said, we believe there is still a reasonable downward pressure on the Cable due to the present weakness in U.S. equities.\u00a0 Therefore, a retracement towards 1.60 would not be surprising.\u00a0 Regardless, the medium-term uptrend is in good shape due to the progress the GBP\/USD has made since January lows.\u00a0 With Britain\u2019s economic data out of the way for the week, movement in the Cable will likely rely more upon its positive correlation with U.S. equities.\u00a0 Hence, investors should keep a close eye on the S&P and its ability to hold 900 should it be tested.<\/p>\n

Present Price: 1.6299<\/p>\n

Resistances: 1.6315, 1.6371, 1.6412, 1.6498, 1.6574, 1.6620<\/p>\n

Supports: 1.6263, 1.6210, 1.6141, 1.6080, 1.6013<\/p>\n

Psychological: 1.65, 1.60<\/p>\n

\"\"<\/a><\/p>\n

Market Commentary<\/strong><\/em> provided by Fast Brokers<\/strong><\/span><\/a>.<\/p>\n

Disclaimer:<\/strong> FastBrokers\u2019 market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell\/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.<\/p>\n

Risk Disclosure:<\/strong> There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Fast Brokers – The Cable has pulled back to our 3rd tier uptrend line after investors reacted negatively to today\u2019s data from Britain.\u00a0 Most analysts are highlighting the report showing negative growth in retail sales over the past month.\u00a0 However, viewing the data from a more historical perspective, British retail sales tend to deviate … <\/p>\n

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