GBP/USD is heading south

Following a shallow upward rally due to short covering, bears have regained control of GBP/USD's direction. While the initial two supports, at 1.5996/72 and 1.5895, are highly unlikely to pose a serious threat to the current momentum, 1.5861/16 may prove to be a formidable area. Rallies, in the meantime, are to be contained by resistances at 1.6055/85 and 1.6118/35.

Negative SWFX traders' sentiment with respect to the cable is unchanged since the last week, as 63% of traders carry on holding long positions and 37% of them expect the Sterling to appreciate. Additionally, 60% of orders are to short sell the British Pound, thus reinforcing bearish outlook.