Pound to Remain Resilient but Breakout Unlikely
GBPUSD – Retail FX trading crowds continue to sell the British Pound against the US Dollar (ticker: USDOLLAR) as it tests key highs. We would normally take this as a contrarian signal to price action and call for further GBPUSD gains, but it’s important to note that our data shows that retail traders tend to do well in slow-moving FX market conditions.
We’ll take a cautiously bearish British Pound bias as FX Options data shows volatility expectations trade near five-year lows. We would obviously change our stance if we see an important jump in FX vols, but until that happens we see little option but to favor further US Dollar consolidation across the board.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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