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"It all goes back to China, where opaqueness remains over its currency market, monetary policy and capital controls. The forex market is most on edge about a further possible devaluation of the yuan."
- BAML (based on Reuters)
Pair's Outlook
The Sterling recovered from the July low yesterday and not only pierced the 200-day SMA, but also the second resistance level in face of the weekly R1. Gains, however, were limited by the 1.54 major level, which might cause the Cable to retrace its previous steps. Nevertheless, the weekly R1 is to attempt and hold the pair from declining and cause another rally towards the strong resistance cluster just above the psychological level of 1.55, which is the ceiling the Pound could hit before the MPC votes tomorrow. Technical studies, on the other hand, are still giving bearish signals.
Traders' Sentiment
Bulls keep retreating, as only 53% of all positions are now long. The portion of purchase orders, however, edged up from 44 to 56%.
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