Cable hits resistance

The sterling has continued to march ahead and has been an outperformer among the majors over the past month or so.

Source: Bloomberg

There have been suggestions the currency is benefiting from the post-election optimism, encouraging investment along with EU turmoil on Greece, which resulted in flows into the UK. Perhaps this explains why the pound has been rising as the Greece crisis escalates.

Gains in cable have come despite positive commentary on the US economy continuing to pour in. Cable surged from around $1.5200 earlier this month and printed $1.5930 before a minor pullback.

This could have been a result of hawkish Fed commentary supporting the greenback. John Williams expects two rate hikes this year and Loretta Mester said she expects the Fed to hike this year. There will be further fedspeak this week and it’ll be interesting to see which way it’ll swing the greenback.

The price action is also very interesting as there is a resistance line which has capped all rallies since February and currently comes in at around $1.6000. There is also a nice uptrend emerging, which has been supporting prices since April lows. I feel traders should look into buying dips and a break above $1.6000 could see traders add onto longs.

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