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    GBPUSD inter-markets: volatility poised to extend further Pablo Piovano

    The Sterling met a wave of selling pressure at the very beginning of the trading week, sending GBP/USD to print fresh lows in the mid-1.4100s, although it has managed to regain the 1.4200 neighbourhood so far during the European session.The likeliness of the UK leaving the European Union at the upcoming Referendum on June 23 seems to have gathered further traction in response to poll results published over the weekend, pointing to a surprising 19-points lead to the ‘Leave’ vote.The deep pullback in GBP remains supported by a generalized sentiment towards the risk aversion, sustained at the same time by declining yields in UK Gilts – with 5-year in multi-week lows and fresh 2016 troughs in the 10-year benchmark. At the same time, the risk-off trade remains reflected by a sharp upside in the volatility gauge tracked by VIX, while the FTSE100 is flirting with 4-month lows near the critical 6,000 pts support.Adding to the grim scenario around GBP, the latest CFTC positioning report showed speculative net shorts in the sterling have climbed to levels last seen in June 2013, with more than 66K contracts during the week ended on June 7.Looking ahead, GBP sentiment is expected to remain fragile and to the mercy of UK-EU Referendum polls. Next stop in case the selling pressure accelerates is located around the psychological 1.4000 handle (April low), while a breach of that level could surely pave the way for another visit of 2016 lows at 1.3833 (February 29).

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