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A look back over the past few weeks

We last visited Cable nearly two months ago when we were trading around the 1.5750 area. Since then Cable has obviously performed very well - we failed around the 1.6000 handle at the beginning of April on the second test of the year, but the market found support around 1.5800 before moving back up. This time we broke the psychological 1.6000 handle in mid-April and since then we have continually traded above it, trading as high as 1.6300 at the end of last month.

Even Recession can’t slow us down

The strong Pound has come in spite of some relatively bad data coming out of the UK in the past month or so, none more so than last week’s GDP data which confirmed that the UK had slipped into a ‘double dip’ recession by technical definition. Although we have fallen back slightly since that piece of data was released, we still trade close to the 1.6200 handle which is remarkable really. The weaker Dollar has obviously played some role in Cable’s uptick but the Pound has remained strong against all major currencies so there is an underlying bid there.

NFP Friday

Today sees the data that all eyes turn to each month - the US Jobs report. Current analyst expectations are for a 160,000 print - up from last month’s 120,000 reading but below the better readings of the year of around 200,000 jobs. Due to the recent jitters in the market over Europe especially, a lower than expected number is likely to be taken particularly badly by the Dollar and equity markets so this could have a big effect on today’s price action.

Technical Outlook

Ove the past week or so Cable has found support at 1.6175 and in the short term this is the barrier that needs breaking if we are to retrace further from the highs. Price action is likely to be contained today until the NFP release, after which the moves should give a clue as to next week’s direction. The close in relation to the release will be very important. Should we break lower then support lies around 1.6080 before the important 1.6000 handle. To the upside, last week’s high at 1.6300 will be the first important resistance. Above here there isn’t much before 1.6475 - this should cap further gains if we get here next week.