The Cable failed to fully participate in Tuesday’s rally in U.S. equities, remaining well below our 3rd tier downtrend line. The lack of excitement in the GBP/USD came despite better than expected housing and consumer spending data. The downturn of the Cable while ignoring positive data shows the currency pair is expressing concern over the condition of the U.S. economy. Since the British and American economies are so intertwined, particularly in the financial industry, further deterioration in America could ultimately bleed into Britain. Therefore, all eyes will be on U.S. equities to see if the S&P’s 2008 lows can hold. However, considering our negative outlook for the S&P futures, we maintain our negative stance on the GBP/USD. On a positive note, the Cable still has the 12/12-12/20 base to fall back on to the downside. Fundamentally, we hold our resistances of 1.4505, 1.4569, 1.4660, and 1.4742. To the downside, we maintain our supports of 1.4392, 1.4328, 1.4242, and 1.4142. The 1.45 level still serves as a psychological barrier to the upside. The GBP/USD is currently exchanging at 1.4472.
