Cable Hits 6-Year High; Strong Data Will Provide Further Strength
Cable hit new six-year highs on the solid construction PMI, which at a reading of 62.6 was much stronger than expected. The printing on the purchasing managers’ report was up from 60.0 in May and caught many investors off guard as the consensus forecast for a decline to 59.5. This is the highest level since February and returns the indicator near to its cycle peak.
The U.K. June Markit construction PMI much stronger than expected and the highest level since February and returns the indicator near to its cycle peak. The breakdown showed the highest pace in employment growth since 1997, and new orders growing the most since January. Residential building drove the improvement, though commercial real estate also rose, offsetting a moderate in civil engineering activity. The data follows yesterday’s solid manufacturing PMI survey, and Thursday investors will need to absorb the services PMI which will collectively signal continuing strong economic recovery moment, justifying the BoE’s recent shift to a hawkish policy stance.
Cable clocked a new peak of 1.7180. Support is now marked at 1.7150, and then again lower near the 10-day moving average at 1.7050. Resistance on the currency pair is a Fibonacci retracement level at 1.7330, which is a 50% retracement level of the 2007 to 2009 decline. Momentum on the currency pair continues to moving higher with the MACD printing in positive territory with an upward sloping trajectory. The relative strength index (RSI) is moving higher with price action which reflects accelerating positive momentum, while printing near 73, which is above the overbought trigger level of 70 and could foreshadow a short term correction in the currency pair.
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