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"Politics is going to be more important than economics for the next three months in the UK and so far, both major political parties seem pretty keen on tearing themselves apart from within. The resignation of Iain Duncan Smith will simply add another layer of political risk to sterling's prospects."
- Societe Generale (based on Reuters)
Pair's Outlook
On Monday the Sterling experienced the expected corrective decline against the Buck and returned below the 1.44 major level. However, according to technical indicators, the Pound is likely to appreciate again and extend its recovery towards the current broadening falling wedge's resistance line. The Cable remains supported by the weekly PP and the 55-day SMA around 1.4335, while the monthly R1 is providing immediate resistance at 1.4446. In case of a breach of the monthly R1, the second target will be the Bollinger band circa 1.4566, but the 1.45 psychological level is to prevent the pair from surging that high.
Traders' Sentiment
Market sentiment slightly improved, as 58% of all open positions are currently long (previously 51%). The share of purchase orders also increased, namely from 43 to 60%.
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