GBP/USD May Continue Its Near-Term Downward Momentum

The Cable’s rally ran out of gas at our 1.4781 resistance after surging on better than expected CPI and mortgage approvals data.  It appears the GBP/USD may continue its near-term downward momentum towards our uptrend line and 1.4570 support with U.S. equities looking to open lower ahead of key economic data.  Today Britain will give us a better picture of its consumer sentiment with CBI Realized Sales.

Additionally, the U.S. will release a flood of data including Durable Goods Orders, New Home Sales, and weekly Crude Inventories.  We knew reaching and surpassing February highs would be a challenge.

The performance of the Cable over the rest of the week could determine whether the currency pair meets the challenge or stumbles back into its debilitating downtrend.  Surpassing 2009 highs is all about upward momentum, and if the Cable doesn’t solidify and recover soon Tuesday’s high could quickly become the peak of the next leg down.

The performance of the GBP/USD will now largely depend on the ability of U.S. equities to continue their ascent coupled with comparative inflation rates between the two economies.

Fundamentally, we maintain our resistance of 1.4671 and find fresh resistances hanging at 1.4704, 1.4781, and 1.4809.  The 1.45 area will serve as a psychological cushion with 1.50 acting as a highly psychological barrier.  To the downside, we see supports of 1.4619, 1.4570, 1.4544 and 1.44498.   The GBP/USD is currently exchanging at 1.4609.

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