The Pound is experienced relative weakness across the board after the BOE announced it will add $50 billion to its present quantitative easing operation to make a grand total of $125 billion.  While analysts expected the BOE to keep its benchmark rate unchanged at .50%, the additional funds for quantitative easing caught investors a bit off-guard.  Boosting quantitative easing could indicate that deflationary pressures are stronger than expected, meaning the British economy is still facing some unforeseen difficulties.  The Cable pulled back from its rally on strong volume in response to the news.

Despite today’s downturn, the Cable has found reliable support once again at 1.50, showing the bulls aren’t ready to call it quits.  The resilience of the GBP/USD stems from the consistent, positive economic data coming from Britain over the past two weeks. 

Additionally, the S&P futures have seemingly broken free of their 900 psychological level, so the Cable is receiving help from its positive correlation with U.S. equities.  However, the large volume down-bar is disconcerting.  Therefore, if U.S. equities experience profit-taking today, the GBP/USD could be under substantial selling pressure.  The 1.50 level and our 3rd tier uptrend line with be key for the near-term.  Regardless of the present pullback, we maintain our bullish outlook on the GBP/USD given positive global economic data and the current strength of U.S. equities.

Fundamentally, we maintain resistances of 1.5059, 1.5114, 1.5158, 1.5213, and 1.5257.  To the downside, we hold supports of 1.5017, 1.4988, 1.4946, 1.4902, and 1.4869.  1.50 serves as a key psychological cushion with 1.55 acting as a psychological barrier. The GBP/USD is currently exchanging at 1.5051.

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