Traders report that model funds have been bailing out of short
sterling positions, first against the EUR then against the USD which has aided
the sterling performance today. The cross is holding around 0.6701 after the
sell-off with GBP/USD now at 1.9585 after meeting offers at 1.9600/05. There are
anecdotal reports however of large GBP shorts in the market with risk for
another move higher on GBP/USD. Traders continue to watch the hourly downtrend
line from the 1.9915 highs at 1.9600/05 and expect another strong wave of
sterling short-covering on a break above. Risk is still seen for a move higher
on a short-squeeze before the afternoon is out. |