It's been a volatile session thus far for the Cable and it seems the currency pair is in for a high volume day. The GBP/USD started the session fresh by climbing from our 3rd tier uptrend line, eclipsing previous June highs after much better than expected home price data. However, the party was busted by much lower than anticipated current account and final GDP numbers. It seems a troubled global economy coupled with an appreciating Pound spells bad news for British exports, exemplified by a discouraging current account deficit.

The final GDP data is the more discouraging of the two since it is at its lowest level in 50 years. The continual drag on the financial services industry doesn't bode well for Britain's domestic production. The mixed data from Britain is a change of pace from the past couple months of improving figures. Therefore, the GBP/USD may find its near-term movements to the upside a bit constrained.

Naturally, investors reacted negatively to the current account and GDP news. Volume increased to the downside and Cable has reversed back below previous June highs and our 3rd tier uptrend line. However, regardless of current hesitation, the currency pair has multiple forms of support to the downside beginning with the psychological
1.65 level and our 2nd tier uptrend line. Near-term momentum remains to the upside, and the Cable will have to experience a large, technical contraction to counteract the progress it has made this month.

The news only picks up pace from here. The U. S. will release consumer confidence and Chicago PMI data today followed by Japan's TMI tonight. Britain will reveal further housing price data tomorrow along with its manufacturing PMI number. Additionally, the U. S. will release manufacturing, housing, and employment data of its own. Hence, we expect volatility to escalate. If the data rolls in better than analyst expectations, the Cable could get the boost it needs to launch a new leg up. On the other hand, more mixed numbers would likely send the GBP/USD towards the bottom end of its trading range.

Copyright 2009 FastBrokers, Latest Forex News and Analysis for Forex, Bullion and Commodity Traders.    

Disclaimer: For information purposes only. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained. There is a substantial risk of loss in trading futures and foreign exchange.