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The sterling is extending its bounce off overnight lows near 1.6230 vs. the greenback, lifting GBP/USD back to the 1.6270 region.

FXStreet (Edinburgh) - The sterling is extending its bounce off overnight lows near 1.6230 vs. the greenback, lifting GBP/USD back to the 1.6270 region.

GBP/USD focus on Scotland

The Scottish independence referendum due on Thursday will undoubtedly be the main event for the pound ahead in the week. However, other significant releases will be published: inflation figures (Tuesday), BoE minutes and employment data (Wednesday) and retail sales (Thursday). All in all, a key week for GBP traders, who have already seen spot coming down from the 1.6600 figure in early September to last week’s probe of the 1.6050 area. “It takes a break of $1.60 to signal something important. It is likely to remain intact until the referendum. A "yes" victory would wreak havoc. Sterling would sell-off sharply, and likely drag down short-term rates. The market would price in a political and economic crisis. At the same time, a "no" victory would allow the market to focus on favorable UK fundamentals and a pound that has lost 12 cents over he past two months. On a as-expected "no" vote, our target for sterling is $1.65-$1.66”, assessed the research team at BBH.

GBP/USD key levels

The pair is now retreating 0.04% at 1.6259 with the next support at 1.6205 (low Sep.12) ahead of 1.6187 (low Sep.11) and finally 1.6052 (low Sep.10). On the flip side, a breakout of 1.6279 (38.2% of 1.6645-1.6052) would aim for 1.6340 (high Sep.5) and then 1.6418 (61.8% of 1.6645-1.6052).

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