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"Sterling appears overvalued verses the dollar (and) the soft dataflow, in addition to the upcoming political risk, suggests that there is scope for another period of sterling undershooting."
- BNP Paribas (based on Reuters)
Pair's Outlook
The Sterling experienced substantial volatility on Thursday, but remained almost completely unchanged against the US Dollar, unable to stabilise above the immediate resistance in face of the 20-day SMA. The Cable could post more gains today, but the slowing bullish momentum suggests that bears are likely to take over. Moreover, daily technical studies are bolstering the possibility of the negative outcome, suggesting that the closest support, namely the monthly PP, is to fail to keep the pair from edging lower. In this case, the main target will be the 100-day SMA, located around 1.4359.
Traders' Sentiment
There are still 60% of traders holding long positions today, unchanged since yesterday. At the same time, the number of orders to sell the US Dollar edged lower from 56 to 53%.
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