EUR/GBP Returns to Post ’Brexit’ High, Retail Traders Remain Net Short

Talking Points

• EURGBP has returned to its post ‘Brexit” high, a level not seen since 2013
• Historical SSI showing that only twenty percent of traders are long
• Volume for EUR/GBP has slowly cooled from a post-Brexit swell over the weeks

Keep an eye on short-term trends for the using the Grid Sight Index (GSI) here.

The EUR/GBP has returned to the multi-year highs hit after the EU referendum. The pair, intraday came within pips of the July 6th high at 0.8625 that marks the post “Brexit” high. Prior to that advance, the market hadn’t traded at that level for nearly three years.

Despite the proximity to of such remarkable highs for the pair, retail traders remain positioned for a turn according to the DailyFX Speculative Sentiment Index (SSI). The measure is showing a reading of -3.99 which indicates that for every long EUR/GBP position, there are 3.99 shorts. When this indicator is expressed as the percentage long (as shown below), the reading indicates that only twenty percent of traders are long. According to Senior Strategist David Rodriguez, retail traders frequently attempt to pick tops and bottoms in markets at inappopriate times and thereby can render a contrarian indicator of the SSI.

Advancing further into multi-year highs or retreating may be encouraged by high profile scheduled event risk. In the final day of trading this week, Euro-area and Greek GDP figures are due for the Euro and the UK June construction PMI is scheduled for London hours. In the week ahead, top event risk includes UK inflation (CPI) and employment figures. Eurozone and German investor sentiment surveys are key for the other currency.