British Pound May Continue Higher Against US Dollar
Forex retail crowds remain net-long the British Pound against the US Dollar (ticker: USDOLLAR), but the past week has shown a substantial shift in sentiment and we have modified our trading bias accordingly. Last week we unreservedly forecast further British Pound weakness as trading crowds had aggressively bought into GBPUSD declines. The facts have changed, however, and we see evidence that the US Dollar itself may fall through short-term trading.
Our proprietary retail FX positioning indicator shows that GBPUSD short positions have grown by nearly 30 percent since last week, while longs have fallen a similarly significant 20 percent.
Crowds remain net-long, but the significant week-over-week shift in sentiment suggests the British Pound may trade sideways or higher through the coming week of trading.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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