23 Jun 2009

GU Analysis:
Sweeping across Europe and then US, the equlity showed major drop. The DOW fell 200 points. The correlation between the GBPUSD pair and major global equity indices has pulled back to recent trade. The buck (USD) seems to be gaining on the back of poor economic estimates by the World Bank, which announced a 2.9% contraction in world economy

In UK, the HPI was reported -0.4% compared to last month +2.4%, a sign of not a total recovery.

Other important risk barometers are showing noteworthy signs of stress: the spread between US Treasuries and highly-speculative junk bonds has recently increased after several months of contraction.

Today,
With no significant US data releases this Monday, and a relatively light economic calendar, the focus for the market is firmly on the FOMC meeting.

Also, another housing indicator, this time touching the more sensitive area of housing - bank mortgages. The banking sector was also one of the most problematic sectors in this crisis. Last month, Mortgage Approvals disappointed and rose only to 27.7K, and failed to reach the 29K mark. This time, expectations are for a rise to 29.5K. It’s published on Tuesday at 16:30 SGT.

The reversal may came in Sales of existing U.S. homes, likely rose for a second straight month in May as plentiful supplies and low mortgage rates have opened the resale market to a wider range of buyers, according to a Reuters poll. Time 2200hrs SGT.

Support at 1.622, then 1.613. Breaking this could send the cable towards a bearish trend.
Resistance is at 1.653, then 1.67.

Trend: Bearish, but expect reversal at support.