Wednesday, June 25, 2014

Cable stalls at resistance | Poor US data fails to impact

While the GBPUSD rate (Cable) has managed to creep above its 200 period Simple Moving Average (SMA), it is having difficulty making at above two other levels of resistance that have been in play for some time now. These are the high set during August of 2009, all of five years ago, and the psychologically important round figure of 1.70 GBP to the US dollar.

The market is fairly moribund at the moment, and we would like to see more volatility in order to be confident that the levels mentioned above can be breached in a sustained manner.

Poor US data fails to impact

There were two data releases in the US yesterday, both of which would have been calculated to cause a weakening of the dollar (and a consequent rise in the GBPUSD pair). These were the revision of the US Gross Domestic Product (GDP) figure for the first quarter, which came in much lower than expected (a contraction of 2.9%), and durable goods figures  that also were very much lower than had been expected (a drop of 0.1% against a rise of 0.4% for the previous month).

As each of those releases is calculated to stave off any thoughts of interest rate rises by the US Federal Reserve, they resulted in a small increase in GDPUSD immediately after they hit the wires. This, however, was quickly given back to leave the level largely unchanged. Such a rejection of news is an indication that the resistance discussed above has the potential to hold.

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