The Cable is pulling back a bit with U. S. markets trading sharply lower. The GBP/USD is holding up relatively well considering the losses taking place in crude and gold, not to mention the S&P futures are off by nearly -2%. Britain didn’t partake in economic data the last couple sessions, giving investors an opportunity to defend the Cable’s psychological1.65 level.

The GBP/USD has a few technical cushions resting nearby, including our 1st and 2nd tier uptrend lines along with 1.65 and August 12th lows. The
1.65 area has proven to be a dense trading zone in the past. Therefore, today’s resilience has history. However, it will be interesting how long the supports hold up should the pullback in U. S. markets pick up momentum. The GBP/USD’s positive correlation with the S&P futures should hold true, particularly if the S&P makes a large technical retracement.

As for the upside, the GBP/USD must confront August 13th and June 30th highs along with our 3rd tier and 2nd tier downtrend lines and the psychological 1.67 level. Hence, there’s quite a battle ahead to the upside. If our 1st tier uptrend line doesn’t hold, then the GBP/USD could experience a more protracted selloff. However, regardless of present downward pressure, the GBP/USD’s medium-term uptrend is intact. Britain will release some heavily-weighted economic data next week, beginning with CPI on Tuesday. We will monitor how the S&P’s shakedown pans out since the bulls are being tested today.

Present Price: 1.6520

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