British pound clobbered as Carney sees room for more easing

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 that 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 U.S. equity markets are down, but just slightly, after mixed economic data issued this morning is causing back and forth trade. A report showed pending home sales declined, while a separate report showed an increase in durable goods orders. The MAR 13 E-mini S&P 500 contract made a new 2013 this morning, touching the 1500 level, then getting sold back down to the low 1490s. 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 British pound for you today. As referenced earlier, the pound has been suffering to selling mainly because of 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 then 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.

Click to enlarge.

About the Author
Anthony Lazzara

Anthony Lazzara, CEO of Newport Beach, Calif., commodities investment firm Lido Isle Advisors, spent 10 years as a trader and floor broker at the Chicago Board of Trade and Chicago Mercantile Exchange. Anthony has significant experience in the energy, fixed income, and equity futures markets. After being a long-time independent futures trader, Anthony saw a tremendous opportunity to educate investors on how to invest in professional traders. Anthony is now focused on his duty as CEO of Lido Isle Advisors.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome