From Citibank’s “Daily FX & Market Commentary” (for the 5th) – a look at cable, both fundamentals and technical:
GBP Outlook:
- The U.K. Construction PMI in July shows that construction activity continues to surge as housing activity growth reaches fastest since late-2003
- Building activity is being fueled by surging demand for new construction projects
- New orders in the industry continued to rise in July at a rate rarely exceeded in the survey’s 17-year history
- Meanwhile, sharp increases in overall construction activity led to a new survey-record pace of job creation. The sector’s PMI Employment Index rose from 64.0 in June to 64.7
- The upbeat U.K. economic outlook will likely support the BOE to hike rates earlier in Q4 this year and accelerate the pace in 2015. GBP/USD may stabilize at 1.6693 and 1.6814
Technical Analysis:
- Since Sep 2013, GBP is still on its uptrend and each retracement dropped 2.2% on average
- The recent plunge in GBP may stabilize at 1.6814 (a 2.2% drop from 1.7192) and the next support may find at 1.6693. The pair will likely rebound to 1.7192 upon consolidation.
