{"id":4316,"date":"2009-10-16T12:37:20","date_gmt":"2009-10-16T17:37:20","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=4316"},"modified":"2009-10-16T12:37:20","modified_gmt":"2009-10-16T17:37:20","slug":"gbpusd-consolidates-after-impressive-breakout","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2009\/10\/16\/gbpusd-consolidates-after-impressive-breakout\/","title":{"rendered":"GBP\/USD Consolidates after Impressive Breakout"},"content":{"rendered":"

By Fast Brokers <\/strong>– The Cable pulled a rally out of left field yesterday and exploded for nearly 400 basis points since our previous commentary.\u00a0 The psychological 1.60 level ended up having a marginal impact and has been left in the dust.\u00a0 Once the Cable got above our previous 3rd tier uptrend line, now our 1st tier, the currency pair took off as the S&P futures rallied towards 1100.\u00a0 The GBP\/USD\u2019s surge comes with little data besides a decline in the CCC.\u00a0 In fact, CPI came in weaker than expected this week and could be a cause for concern for the BoE unless they expect prices to rise with an improvement in unemployment.\u00a0 We attribute the Pound\u2019s breakout to a massive short squeeze and somewhat encouraging earnings from financials.\u00a0 Financial services comprise a large portion of Britain\u2019s GDP, so an improvement in earnings bodes well for Britain\u2019s overall economy and causes investors to speculate a pause in BoE QE.\u00a0 Either way, the evidence behind the Pound\u2019s surge is inconclusive and the Sterling\u2019s breakout caught us by surprise.\u00a0 We don\u2019t like to be party crashers, but we\u2019re not entirely sold on the longevity of the Cable\u2019s new uptrend.\u00a0 However, the Cable\u2019s breakout does give us another glimpse of the future when all central banks start to tighten liquidity.\u00a0 For the time being, we will need further confirmation fundamentally, technically, and psychologically.<\/p>\n

Psychologically speaking, investors will receive a stream of public address from central bank heads to kick off next week, including Bernanke on Monday and King on Tuesday.\u00a0 We\u2019ve seen how large of an impact King\u2019s comments can have on the Pound, so we expect volatility to remain at a heightened state.\u00a0 On a cautionary note, it\u2019s unknown how Governor King will address this week\u2019s breakout in the Pound.\u00a0 If he were to alter his dovish monetary stance, then the GBP\/USD\u2019s near-term gains could really accelerate.\u00a0 However, we believe King will try to keep investors in check and tame gains in the Pound in order to keep British goods and services attractively priced for exportation.\u00a0 British econ data will be scattered throughout the week, yet fundamental focus will likely square on China\u2019s important data flow on Wednesday.\u00a0 China has been at the forefront of the global economic recovery, so investors will be paying particularly close attention to China\u2019s GDP and Industrial Production figures late Wednesday EST.<\/p>\n

In terms of technicals, the Cable has a few medium-term barriers to overcome in order to make believers out of us.\u00a0 These include our new 4th tier downtrend trend line, the psychological 1.65 level, and 9\/11 highs.\u00a0 Our 4th tier seems to be the most important of the three since a failure would imply a retest of September highs since it runs through 9\/11.\u00a0 As for the downside, the Cable has clearly created a new comfort zone over the past 24 hours.\u00a0 The currency pair now has multiple uptrend lines, 9\/21 lows, and the psychological 1.60 level working in its favor.\u00a0 Therefore, the Cable has placed itself in an opportune position to breakout\u00a0 into a more lasting uptrend should psychological and fundamentals fall into line.<\/p>\n

Present Price: 1.6340<\/p>\n

Resistances: 1.6342, 1.6372, 1.6395, 1.6413, 1.6446, 1.6470<\/p>\n

Supports: 1.6305. 1.6271, 1.6246, 1.6205, 1.6167, 1.6130<\/p>\n

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

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

Market Commentary<\/strong><\/em> provided by Fast Brokers<\/strong><\/span><\/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 pulled a rally out of left field yesterday and exploded for nearly 400 basis points since our previous commentary.\u00a0 The psychological 1.60 level ended up having a marginal impact and has been left in the dust.\u00a0 Once the Cable got above our previous 3rd tier uptrend line, now our … <\/p>\n

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