The Cable failed to tackle June highs and proceeded to reverse course on comparable volume to the downside.  We notice a similar price/volume pattern in the EUR/USD, indicating investors are very indecisive right now.  Investors aren't sure whether to fully commit to an economic recovery, so the bulls and bears are engaging in a head-on battle.  The Cable has ducked back down towards June 23rd lows.

Investors are defending this level for the 6th time this month, developing a consistent trading range in the process.  Bulls have come to the rescue time and again in June since Britain's economic data has been more optimistic than that of the U.S. and EU.  Indecisiveness and yo-yoing is prevalent across the marketplace.  Therefore, the Cable is not alone in its behavior.

Meanwhile, the GBP/USD is building up a nice base to build from should the uptrend kick back in.  Speaking of trends, our 3rd tier uptrend and downtrend lines are reaching an inflection point today, supporting our prediction of heightened volatility.

Investors should keep an eye on the S&P futures and their ability to hold the 870-890 area to the downside.  Should U.S. equities make a game-changing break to the south, the GBP/USD and EUR/USD would likely be inclined to follow suit due to positive correlations.  Due to the mixed behavior exhibited by the Dollar as of late, we are in a neutral stance as we wait for investors to make a directional decision.

Regardless, the GBP/USD should maintain an overall relative strength as long as British economic data impresses analysts.  Even if the Cable should drop beneath June 23rd low, the currency pair has several medium-term uptrend lines and the psychological 1.60 level for support.  As for the upside, we will need to see the GBP/USD clear our trend lines and previous June lows on considerable volume for us to reactive our bullish outlook.        

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