The Cable is deflecting off our 3rd tier uptrend and downtrend lines as the S&P futures battle their 1st tier uptrend line. Weakness in the GBP/USD also comes in reaction to a large pullback in gold. Since Britain is quiet on the economic data front, the Cable is taking its cue from correlations.

Meanwhile, the Cable continues to flex its relative strength as anticipated. Since we’ve seen a little more data from the rest of the world this week, investors are eating off of the plate of outperforming data we’ve seen from Britain over the past 5 or 6 weeks. However, investors should take note of the fundamental downward movement in gold today. The precious metal is normally positively correlated with the EUR/USD and GBP/USD, so the pullback in gold could be indicating further strength in the Dollar.

The key for relative stability in the Cable will likely be the ability for the S&P and crude futures to hold onto their positive momentum. For if these investment vehicles make sizable movements to the downside, the GBP/USD would likely be inclined to follow suit, though to a lesser degree. Meanwhile, the GBP/USD has plenty of uptrend lines and the psychological 1.60 level to rely upon to the downside. Therefore, the medium-term uptrend is padded and investors should be too concerned about near-term weakness. The only thing that could knock the GBP/USD off its horse would likely be a large, consistent contraction in future economic data.

Present Price: 1.6395

Resistances: 1.6412, 1.6498, 1.6572, 1.6631

Supports: 1.6371, 1.6315, 1.6263, 1.6210, 1.6141

Psychological: 1.65, 1.60

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