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Crowd Sentiment Favors British Pound Gains

Crowd Sentiment Favors British Pound Gains

David Rodriguez, Head of Product

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ssi_gbp-usd_1_body_Picture_8.png, Crowd Sentiment Favors British Pound Gains

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

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

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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.

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

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