The ‘official’ start to the referendum campaign has begun and this week has seen a blitz of speeches, including one delivered this morning by the UK Chancellor.
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“The lack of enthusiasm for Sterling is demonstrated by net speculative short positions reaching extremes not seen since June ’13,” says Stretch.
Forecasts for the Pound Sterling Against the Dollar
Robin Wilkin at Lloyds Commercial:
“We remain trapped in well-defined ranges. Other than a brief move to 1.3835 in late February, the 1.4050-1.3980 area has been providing support.”
“Intra-day, while 1.4250/55 resistance caps we see risks of a move down to test support.
“A move back through 1.4255 would negate opening a re-test of the range highs at 1.4370, 1.4450 and 1.45.
“Medium term, we expect the market to continue to trade a range between 1.3850-1.35 support and 1.45-1.48 resistance.
“Should we see a breakdown through 1.35, then we have little in the way till meaningful support in the 1.2800 region.
Pound sterling to dollar exchange rate at start of new week
Stéphanie Aymes at Societe Generale:
“GBP/USD has breached a multiyear upward channel support (1.46) and looks headed towards graphical levels at 1.36/1.35 (lows of 1986, 2001, 2009).
“Long dated indicators are close to hitting a floor pointing towards the possibility of consolidation once these levels are achieved.”
1.46/1.4750 should cap short term rebound.
Quek Ser Leang at UOB in Singapore:
“While the undertone for GBP is positive, the current price action suggests that this pair is still caught in a broad consolidation range.
“From here, a retest of last Friday’s high near 1.4240/45 would not be surprising but a sustained move above this level is unlikely (next resistance is at 1.4300).”
Support is at 1.4130 followed by last week’s low of 1.4090.
Over the one to three week timeframe we are advised that the outlook is still neutral and we continue to expect this pair to trade in a broad 1.4000/1.4350 range for now.