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Cable weighed by Strong US Consumer Confidence

Market Analysis

GBPUSD, H4

U.S. consumer confidence climbed 3.3 points to 129.5 in November after rising 5.6 points to 126.2 in October (revised form 125.9. It was 109.4 a year ago. Confidence has come a long way over the past year. Strength was in the expectations component which rose to 113.3 from 109.0 (revised from 109.1). The current conditions index improved to 153.9 from 152.0 (revised from 151.1). The labor market differential rose to 20.2 from 19.6 (revised from 18.8). The 12-month inflation index slid to 4.5% from 4.7%. The report is much better than expected.

Cable has forayed into four-session low territory, logging a low of 1.3255, which extends the correction from yesterday’s two-month high at 1.3383. The failure to close above 1.3340 yesterday, along with today’s decline, negates the technical significance of yesterday’s break of a new two-month range resistance zone. Support is at 1.3197-00. Today’s BoE’s latest financial stability report, along with the OECD’s reiteration of its belief that the Brexit process will crimp UK economic potential until at least 2019, have cast little impact on sterling or broader UK markets. One issue coming into sharp focus into next Monday’s meeting between British PM and top EU representatives is the Irish border issue. Dublin is insisting that there cannot be a hard customs border between Ireland and Northern Ireland, and has threatened to use its veto if necessary.

 

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Stuart Cowell

Senior Market Analyst

HotForex

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