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"Until the referendum takes place in June, we view the risk to our estimates of a weaker pound as standing to the downside, although we would note that the market is already starting from a net short position, whereas short cable became a more popular trade only around 10 days before the Scottish referendum in September 2014."
- Goldman Sachs (based on Business Recorder)
Pair's Outlook
The Cable managed to recover from its intraday low on Thursday, as fundamental data turned into Sterling's favour. However, the acquired momentum was insufficient for the GBP/USD currency pair to retake the 1.42 major level. The weekly S1 and the 20-day SMA keep forming a relatively strong resistance cluster around the 1.42 mark, while the monthly PP is providing immediate support at 1.4141—just under today's opening price. A breach of the monthly PP is likely to cause a decline towards around 1.4050, while the upper target is the 55-day SMA around 1.4286.
Traders' Sentiment
Although not as strong as yesterday, but market sentiment remains bullish at 62% (previously 70%). At the same time, the portion of orders to acquire the British Pound increased from 54 to 58%.
© Dukascopy Bank SA