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"On a 'No' vote, this is a storm in a teacup and volatility will disperse, but on a 'Yes' vote, I think volatility in sterling markets will be heightened for some time."
- Jane Foley, Rabobank (based on Reuters)
Pair's Outlook
The Sterling stopped declining at 1.61, a demand zone mainly implied by the monthly S3. If there is going to be an upward correction, the spikes should not extend far beyond 1.63, namely the 2014 Q1 low and monthly S2. In the near term GBP/USD is expected to aim for the 2013 Q4 low at 1.5850, while in the long run, provided that nothing is fundamentally changed, there is a chance of the rate falling down to 1.48 (2013 low).
Traders' Sentiment
The percentage of long positions in the market increased to the level seen five days ago, when 66% of traders considered the Pound to be undervalued. Meanwhile, the portion of orders to sell the currency also went up, but from 54 to 63%.
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