British Pound Getting Pounded
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Mark Carney, governor of the Bank of Canada, and soon to be governor of the Bank of England, is making waves in the currency markets, specifically in the British Pound prices. Carney has expressed that more easing for England’s economy is a distinct possibility, as he wants to do what he can to further ignite a strong recovery from the recessionary environment which was started in 2008. The current task of monetary policy is to ensure the key economies “achieve escape velocity,” Carney told the World Economic Forum’s annual meeting on Jan. 26 in Davos, Switzerland. More technical analysis on the Pound in a bit…
The US equity markets are down, but just slightly, after mixed economic data issued this morning is causing back and forth trade. Areport showed pending home sales declined, while a separate report showed an increase in durable goods orders. The MAR 13 emini SP contract made a new 2013 this morning, touching the 1500 level, then getting sold back down to the low 1490′s. We believe new highs are a bullish sign, and our first major target for this market has now been hit. We also believe the fact that this market has a bullish gap at 1425.75 that has been left in the dust thus far, is another very bullish technical signal. Our major first support level is 1453.50. As far as pullbacks, we could potentially see a pullback to the 1471-1475 level, but we think this would be an excellent opportunity for bulls to reload at those levels.
We focus more on the Britsh Pound for you today. As referenced earlier, the Pound has been suffering to selling mainly due to incoming BOE head Carney indicating that the Central Bank has more room left for policy accommodation designed to spark growth and ‘escape velocity’ from the great recession. The first key downside support level has been hit today at 1.57, thus we may see some consolidation trade for the very short term. But, we believe the next downside target of 1.56 will be approached, and than possibly 1.5450. We have our major resistance point at the 1.59 level. If the Pound approaches 1.59, we believe this will be an opportunity for bears to reload positions.
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