British Pound Digests Gains

The rally from 1.9841-1.9974 is impulsive and the decline that has followed is corrective. This indicates that Cable is headed higher (as long as 1.9841 holds). Resistance is near the intersection of the former 2 month supporting trendline and line drawn off of the 4/18 and 5/1 highs. This line is near the 100% extension of 1.9841-1.9974/1.9913 at 2.0046.

Given the implications of US Dollar COT positioning (discussed yesterday at US Dollar Bought Heavily by Commercial Hedgers is USD Bullish) selling the buck at this point seems a risky proposition. GBP strength is likely better played against the euro.