The GBPUSD currency pair is under pressure again, as polls suggest the ‘Leave’ campaign are surging ahead.

 

After support at 143.50 gave way, the market quickly traded down to the next major support zone, finding some buying at 141.12. If this level is tested and gives way again, the next support level comes in at 140.50. Short term resistance is likely to develop around 1.4350.

 

Currency analysts have mixed views, with few sticking their necks out. The polls are on balance giving the ‘Leave’ campaign a narrow lead, while bookmakers are still pricing an exit at only 35%. Bookmakers are betting that those supporting a Brexit are more vocal, but that on the day those on the fence will vote to stay in Europe.

 

The BOE rate decision on Thursday is seen as a non-event in light of the far bigger Brexit story. There is some speculation of the BOE using the announcement to support a ‘Stay vote’. This could be read either way by the market.

 

The pair is likely to remain very volatile over the next week and is likely to trade erratically as the rumor mill does its thing. Unless traders have a strong view on the referendum long-term directional trades are pointless. There are likely to be numerous opportunities to trade off support and resistance levels.

 

Factors in favor of GBPUSD bullishness:

• Brexit less likely as priced by bookmakers

• US Fed rate hike this summer looking less likely

• Speculators betting on the UK leaving exit will most likely have to cover at some point

Factors in favor of GBPUSD bearish:

• Leave campaign gaining momentum in polls

• Buyers of Sterling likely to remain sidelined until after the referendum