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Retail FX trading crowds remain aggressively short the British Pound against the US Dollar (ticker: USDOLLAR), and we see little reason to diverge from our contrarian bullish bias.
Crowds first turned short the British Pound as it traded above the $1.57 mark through early August. It is worth noting that crowds were further net-short GBPUSD since last week as long interest has risen. Yet our SSI ratio stands at -2.92—there are 2.92 traders short for every one long—and such one-sided sentiment gives little reason to change our bullish bias.
Our sentiment-based strategies most recently went long the British Pound against the US Dollar, and we see further scope for GBPUSD gains amidst clear crowd positioning extremes.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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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.
