Sep
6
2010
6
2010
GBP/USD Struggles as Pound Underperforms
The Pound is underperforming again today as the EUR/GBP pops higher. Investor sentiment towards Sterling is still sour after last week’s round of PMI reports fell short of analyst expectations. The UK economy has clearly hit a bump in the road, yet it remains to be seen whether the present pullback is a sign of a more lasting downturn or merely a cool down in the midst of an upward trajectory. Considering the UK parliament is in the beginning stages of implementing aggressive austerity measures the pullbacks in PMI are disconcerting. The UK will be quiet on the data wire again tomorrow, meaning monetary policy decisions from both the BOJ and RBA should dominate the trading session. Since we’re expecting a positive tone from the RBA its likely positive sentiment from last week’s U.S. employment data will carry over into Tuesday’s trading session. However, considerable global economic headwinds remain and investors should keep in mind that things were looking ugly before bulls came to life last week. Hence, we believe it is wise to be cautiously optimistic until we see whether the recent risk rally has legs. Should the risk rally lose momentum August lows in the Cable may not provide much support.
Technically speaking, the Cable has supports in the form of 9/2 and 8/31 lows. Additionally, the psychological 1.55 level could continue to have a noticeable influence over near-term movements in the Cable. As for the topside, the Cable faces technical barriers in the form of 9/1 and 8/26 highs.
Present Price: 1.5389
Resistances: 1.5398, 1.5419, 1.5449, 1.5472, 1.5503, 1.5530
Supports: 1.5374, 1.5342, 1.5322, 1.5298, 1.5274, 1.5252
Psychological: 1.55, August Lows
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Posted by: Matthew Myers
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