British Pound Breakout Seems Unlikely
GBPUSD – Forex trading crowds have aggressively sold into recent British Pound strength, giving us contrarian signal that the pair may continue its rally against the US Dollar (ticker: USDOLLAR). Indeed, traders are now their most net-short GBPUSD since the pair rallied into its $1.65 highs through late 2011. Can we set a similar sentiment extreme and an important GBPUSD top through short-term price action? A hold of major trading ranges in other USD currency pairs suggests the GBP may likewise remain below highs. We hesitate to join such one-sided retail trading crowd sentiment, but a major break higher seems relatively unlikely without follow-through from other currency pairs.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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