Cable got hit hard on Friday and was already looking soft after the release of the services UK PMI data; 58.7( v 59.1-exp), but accelerated to an 11-month low of 1.5951 following the better than expected US payrolls, with little bounce into the end of the session.Aside from the FOMC Minutes, Cable traders will focus on Wednesdayâ€™s UK GDP outlook, and then on Thursdayâ€™s BOE meeting although no change is expected, and the previous hawkish statements from BOE board members seem to be evaporating somewhat following some recent soft data. There is growing speculation that the pace of any tightening from the BOE will not match that of the FedÂ and if that is to beÂ the case, will keep the pressure on the downside, where, technically the outlook for Cable is beginning to look increasingly negative.Fridayâ€™s close has actually seen Cable break and close below the 100 Week MA (1.6080) and more importantly the 200 WMA (1.6005), which adds to the bearish sentimentÂ as they now become resistance. The weekly close also saw Cable finish below the monthly Kijun / 50% pivot of the run up from 1.4813/1.7191 at 1.6000 and we could now see it head lower towards the next meaningful supports at 1.5880 and at 1.5853 (Nov 2013 low). A break of 1.5850Â would have more bearish implications and would head toward the base of the monthly cloud at 1.5800 and then to the next Fibo support at 1.57201(61.8% of 1.4813 /1.7191).
On the topside, the 100/200 WMAs will be the initial resistances, and while the dollar looks so strong and the momentum indicators are negative it seems doubtful that we are going to reach these levels. If wrong, we could return to 1.6150 and possibly to the first Fibo resistance at 1.6250 (23.6% of 1.7191.1.5951), but if we do so it will provide yet another sell opportunity.
Economic data highlights will include:
T: UK Industrial Production, Manufacturing Production
W: UK Q3 GDP Estimate
T: BOE IR Decision
F: UK Trade balance.
Meta Trader â€“ AxiTraderÂ GBP/USD: Daily
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