Cable Gains After Better than Expected PMI

Cable buying picked up after the U.K. construction PMI rose to 47.0 in July. The pair rallied out of 1.6920 after the earlier pull back from 1.7000 ran its course. There is evidence of strong selling pressure from the 1.7000-05 area and further technical resistance at 1.7020-25, which is contributing to the decent supply capping gains. Sellers at the highs have included investment managers and reserve names, perhaps taking advantage of the lofty levels. Pull backs should remain limited however, with a softer dollar backdrop and the shifting U.K. policy outlook encouraging GBP demand. Elsewhere, EUR-GBP continues to find support after bids at 0.8480 held and a move back above 0.8500 is eyed.