British Pound Forecast to Rally Further
Retail FX trading crowds are now their most aggressively net-short the British Pound against the US Dollar (ticker: USDOLLAR) since the GBPUSD last traded near the $1.61 mark. Such one-sided sentiment warns that the British Pound have may further room to rally—especially as it challenges key technical resistance at July highs of $1.5720.
It is worth noting the significant divergence between EURUSD and GBPUSD crowd positioning and sentiment. The Euro continues to press near fresh lows, but the British Pound remains resilient against the US currency. Given that the Dow Jones FXCM Dollar Index now trades near July lows, a larger GBP rally versus the suddenly-downtrodden USD may be imminent.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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