British Pound Searches For Support
GBPUSD - The ratio of long to short positions in the GBPUSD stands at 4.03 as nearly 80% of traders are long. Yesterday, the ratio was at 3.51 as 78% of open positions were long. In detail, long positions are 1.6% lower than yesterday and 288.3% stronger since last week. Short positions are 14.3% lower than yesterday and 59.7% weaker since last week. Open interest is 4.4% weaker than yesterday and 12.7% above its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.
The British Pound has given back the rally from April as the Bank of England lowered its growth forecast for the U.K., and the sterling may face additional headwinds in the week ahead as the central bank sees a renewed risk of undershooting the 2% target for inflation. As market participants turn their attention to the BoE Minutes due out on May 23, the fresh batch of central bank rhetoric may continue to generate expectations for more quantitative easing, and we will be keeping a close eye on the vote count as David Miles remains the sole member pushing for another GBP 25B in QE. If Adam Posen moves away from the majority and heeds to Mr. Miles’ call for additional asset purchases, we should see the 1.5800 figure give way, which could open the door for a move back to the 1.5600 level.
How do we interpret the SSI? Watch an FXCM Expo Presentation that explains the SSI.
--- Written by David Song, Currency Analyst
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