By: Rab Jafri
A plethora of bad news is hitting the dollar hard, a disappointing Chicago PMI, coupled with a negative surprise on ADP payrolls has lead to short covering on the dollar.
For sterling the fundamentals look bleak, however technically it’s showing a different picture. Markets have been reluctant because of political considerations and the risk of a hung parliament. However, technically sterling could potentially be forming a double bottom.
If the double bottom persists, first break will be 1.5190-1.5200 area- leading to 1.5380-1.5400 area. If 1.5400 is taken out double bottom will be confirmed and would likely open the door to 1.6000 – one of the main drivers would be dollar short covering.
