{"id":3227,"date":"2009-08-06T10:27:37","date_gmt":"2009-08-06T15:27:37","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=3227"},"modified":"2009-08-06T10:27:37","modified_gmt":"2009-08-06T15:27:37","slug":"gbpusd-gets-slammed-after-boe-monetary-shock","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2009\/08\/06\/gbpusd-gets-slammed-after-boe-monetary-shock\/","title":{"rendered":"GBP\/USD Gets Slammed after BOE Monetary Shock"},"content":{"rendered":"

By Fast Brokers<\/strong> – The BOE delivered a monetary shock today, increasing its QE package by $84 billion despite our belief the central bank would refrain from injecting more liquidity.\u00a0 After all, we\u2019ve seen very encouraging data from Britain covering services, manufacturing, housing and unemployment.\u00a0 However, it appears the BOE wants to be on the safe side, taking rampant optimism as an opportunity to deliver a blow to the Pound.\u00a0 The GBP\/USD has been on a tear lately, placing the exportation of British manufacturing and services industries at a competitive disadvantage.\u00a0 Hence, the BOE is doing what it can to even the table.\u00a0 One worrying side-effect of today\u2019s injection of liquidity is that Britain\u2019s credit rating has been questioned over the past couple months due to a deteriorating governmental balance sheet.\u00a0 Therefore, even though Britain\u2019s economy is on the path to recovery, additional debt runs the risk of compromising the nation\u2019s credit rating if the global economy should experience a sizable setback.<\/p>\n

The BOE\u2019s injection of liquidity is having its desired effect, knocking the GBP\/USD below our previous 3rd tier uptrend line on climbing sell-side volume.\u00a0 We believe the Cable could have quite a bit of room to the downside if it doesn\u2019t recovery above our now 2nd tier uptrend line in a hurry. The next worthy supports to the downside appear to be August lows and October 30th highs.\u00a0 Therefore, a retracement towards 1.67 may be in the works.\u00a0 In the meantime, the GBP\/USD may not get much immediate-term assistance from the S&P futures since they\u2019re having a difficult time with 1000.\u00a0 The S&P futures aren\u2019t reacting to the lower than expected weekly unemployment claims, showing bulls may be worn out and ready for more profit taking.\u00a0 However, more positive employment data from the U.S. and a better than expected PPI release from Britain tomorrow could help counteract the present pullback and get the GBP\/USD back on track.<\/p>\n

Meanwhile, investors should avoid having short-term memory loss right now.\u00a0 Economic data from Britain has been overwhelmingly positive lately, and the 2nd quarter earnings season has fared better than analyst expectations.\u00a0 Therefore, there\u2019s little reason to be fundamentally negative on the GBP\/USD.\u00a0 While the Cable has quite a bit of mobility to the downside due to its recent strong run, today\u2019s monetary shock from the BOE should only prove temporary.\u00a0 Today\u2019s injection of liquidity shouldn\u2019t have the power to derail the GBP\/USD\u2019s medium-term uptrend on its own.\u00a0 Hence, investors should return to their senses after today\u2019s shock wears off.\u00a0 As for the upside, the Cable will have to deal with our new 1st tier uptrend line along with August highs, our 2nd tier downtrend line and the psychological 1.70 level.\u00a0 It seems the GBP\/USD will have to consolidate and build a new base before it can think about reattempting these barriers.<\/p>\n

Present Price: 1.6809<\/p>\n

Resistances: 1.6837, 1.6851, 1.6874, 1.6895, 1.6910<\/p>\n

Supports: 1.6791, 1.6775, 1.6735, 1.6708, 1.6693<\/p>\n

Psychological: 1.70<\/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 BOE delivered a monetary shock today, increasing its QE package by $84 billion despite our belief the central bank would refrain from injecting more liquidity.\u00a0 After all, we\u2019ve seen very encouraging data from Britain covering services, manufacturing, housing and unemployment.\u00a0 However, it appears the BOE wants to be on the … <\/p>\n

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