Sep
9
2010

 

GBP/USD Outperforms in Wake of HPI Data

The Cable is outperforming the EUR/USD after UK topped analyst expectations by registering growth of 0.2%.  Additionally, manufacturing production came in line with analyst expectations.  These two solid data releases are helping counter negative sentiment stemming from last week’s discouraging PMI figures.  However, today’s data is unlikely to sway the BOE as the MPC makes its monetary policy decision.   The BOE is expected to keep its monetary policy unchanged as the central bank provides a dovish monetary policy to counter a tightening fiscal policy.  While a slowdown in last week’s PMI data would entice investors to believe that the MPC is becoming increasingly dovish, we should keep in mind that the BOE will balk at loosening liquidity as long as CPI is over 3%.  Hence, the BOE has little choice but to stand pat until consumer prices deflate or the UK economy improves.  The U.S. will follow the BOE with trade balance data along with weekly unemployment claims.  If the U.S. trade deficit widens then investors could become more negative regarding the U.S. economic recovery and send the risk trade lower across the board.  On the other hand, if the deficit can remain below $50 billion then markets may be able to balance over the near-term.                    

Technically speaking, the Cable has supports in the form of 8/24 and 9/7 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 9/8 and 8/26 highs. 
Present Price: 1.5422
Resistances: 1.5440, 1.5464, 1.5490, 1.5525, 1.5551, 1.5572
Supports: 1.5419, 1.5398, 1.5374, 1.5342, 1.5322, 1.5298
Psychological: 1.55, August Lows
 
 
 

 
Posted by: Matthew Myers

 

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