‘I definitely see sterling as vulnerable after Article 50 is triggered because there is a significant risk that when the negotiations start with the EU, the EU could certainly play quite a difficult hand for the UK to respond to.’ – Jane Foley, Rabobank (based on Business Recorder)
On Monday, the monthly S1 prevented British Pound from appreciating further, resulting in another spark of bearish momentum earlier today. Investors swiftly sold the Sterling amid latest news that Article 50 could be triggered by the end of the month. Nevertheless, the tough demand cluster circa 1.21, formed by the monthly S2, the weekly S1 and the lower Bollinger band, is expected to limit today’s losses. Moreover, a close under 1.2150 implies that more weakness this week could follow, leading to a drop even under 1.20, rather than the retest of the trend-line around 1.24. Technical indicators are also in favour of the negative outcome today.
Today 66% of traders are long the Pound (previously 69%), whereas all pending orders are equally divided between the buy and the sell ones.