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British Pound May Strengthen Further

British Pound May Strengthen Further

David Rodriguez, Head of Product
ssi_gbp-usd_body_Picture_5.png, British Pound May Strengthen Further

Forex trading crowds recently turned net-short the British Pound against the US Dollar (ticker: USDOLLAR) for the first time since the pair traded towards $1.57, and the GBP stands to gain further against the suddenly-downtrodden US currency. We use our Speculative Sentiment Index readings of crowd positioning as a contrarian indicator; if most are selling we prefer to buy and vice versa.

Crowd long interest fell by a significant 32 percent overnight, while the number of orders short jumped by a similarly noteworthy 25 percent. Given our simultaneously bullish Euro/US Dollar forecast and technical calls for further British Pound gains, we believe that the GBPUSD may continue its recent rally in the coming week.

How do we interpret and trade with the SSI? Watch an FXCM Expo Presentation that explains the SSI.

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the Speculative Sentiment Index and other reports from this author via e-mail, send a message with subject line “Distribution List” to drodriguez@dailyfx.com; Contact David via Twitter at http://www.twitter.com/DRodriguezFX

Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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