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Daily Forex Technical Report

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Daily Forex Technical Report Sterling Weakens again ahead of CPI, US Retail Sales Watched

Tue, May 13 2008, 08:03 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Daily Report:

Sterling Weakens again ahead of CPI, US Retail Sales Watched

Sterling's rebound on yesterday's PPI was strong, but short lived. The pound is back under pressure again RICS reported prices fell in the capital exceeded those reporting gains by 94%, the record worst record since the series began in 1994. The data again confirms that housing market recession in the UK is not over yet. Focus now turns to today's CPI report which is expected to show headline CPI climbing from 2.5% yoy to 2.6% with core CPI was up from 1.2% yoy to 1.3% in Apr. The dilemma that BoE is facing, rising inflation and slowing growth, is clearly felt by the markets as the expectation for the timing of next rate cut flip flops with almost every piece of data. And volatility in the Sterling will likely continue further.

Another major focus today will be retail sales in US which is expected to drop -0.1% in Apr with ex-auto sales growing 0.2%. The greenback is steadily mixed so far and is looking for direction from how consumer spending are being affected by slowing economy as well as rising inflation. Other data from US include import and export prices as well as business inventories. Also, focus will be ok a number of Fedspeaks including Bernanke, Pianalto, Noyer, Warsh, Yellen, Hoenig and Fisher.

More Technical Analysis Reports Here

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.9468; (P) 1.9550; (R1) 1.9660; More

Cable's rebound from 1.9442 and touching of 1.9621 resistance with mild bearish divergence condition in 4 hours MACD and RSI indicates that an intraday low is already in place. Outlook is turned neutral for the moment and further consolidation could now be seen. Nevertheless the whole decline from 2.0391 should still be in force as long as cable stays below 1.9772. Below 1.9442 will indicate such fall has resumed for retest of 1.9337 low.

In the bigger picture, down trend from 2.1161 have made a low at 1.9337. Rebound from there should have completed with three waves up to 2.0391, which is corrective in nature. Subsequent fall from there also display a corrective structure too. In other words, wide range consolidation from 1.9337 is expected to extend further. Hence, current fall from 2.0391 will likely be contained by 1.9337 support and be followed by another rise to retest 2.0391 resistance or above before completing the consolidation. Break of 1.9772 resistance will be the first signal that the final rally of the consolidation has started.

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Published on  Tue, May 13 2008, 08:04 GMT