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"While Carney's (comments) may discourage GBP buying in the near term, we still believe that sustained outperformance of the UK economy and inflation consolidation could support the pound before long."
- Citi (based on Reuters)
Pair's Outlook
The Cable reached a new yearly low last week, even though the currency was well-supported by 1.5850/30 and most of the monthly technical indicators were bullish. This confirms the down-trend resistance line (connects Jul 15 and Oct 29 highs) as the dominant factor in the behaviour of the Sterling in the medium term. Accordingly, while there is a high possibility of an upward correction, it should not extend beyond 1.59.
Traders' Sentiment
The SWFX market participants remain undecided with respect to the direction GBP/USD will take, as the gap between the bets on the Pound (55%) and on the Greenback (45%) is negligible—merely ten percentage points.
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