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Sterling: What you need to know this week

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More turbulence for sterling as the threat of Scottish independence continues to unsettle markets ahead of the referendum. In early Monday Asian trading, GBPUSD fell to USD 1.6165, its lowest level in 10 months. It follows an opinion poll that put support for independence ahead of staying in the UK for the first time.

Thomas Light from Faraday Research says the political uncertainty has hit Cable as the market struggles to price in the effects of a yes vote. Cable has broken below a key level of support of USD 1.6250. Furthermore Light says prices gapped below this level on Monday morning, which indicates the strength of bearing momentum.

Light’s strategy this week is to take into account that prices have gapped lower. So he advises traders to wait for a retracement into USD 1.6280 in order to close the price gap and then head lower into the next level of support.