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GBPUSD - Forex Trading Sentiment Extreme Forecasts British Pound Rallies

Thursday, 04 September 2008 14:00:11 GMT

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Written by David Rodriguez, Quantitative Analyst

GBP/USD Ratio: -1.11
Trading Signal: Bullish

Forex Positioning in the British Pound/US Dollar

 

Currency

Last Week

Present*

% Long

% Change in Positions Outstanding

Signal

GBPUSD

1.31

-1.11

0.47

-0.1217

Bullish

British_Pound_2008-09-04

GBPUSD – Our forex sentiment indicator forecasts that the British Pound is likely to rally against the US dollar through short term forex trade, as traders have actually flipped from net-long the GBPUSD to net-short in the past day of currency trading. This is typically one of the stronger signals generated from the SSI, and the fact that it has occurred after such substantial losses underlines the point that we have reached a sentiment extreme in the British Pound. This likewise coincides with a bullish forex futures sentiment extreme as reported by the CFTC’s Commitment of Traders report, and the confluence of these factors is suggestive of a short-term GBPUSD bottom. The SSI is a contrarian indicator and signals GBPUSD gains.
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