British Pound Forecast to Depreciate Further
GBPUSD – Retail FX traders continue buying aggressively into British Pound weakness the US Dollar (ticker: USDOLLAR), and total buying recently hit its highest since the pair last tested $1.54 through June, 2012.
Trade Implications – GBPUSD: Our sentiment-based trading strategies have and will likely continue to sell the British Pound against the US Dollar as the number of traders long GBP outnumber those short by 2.4 to 1. We’re seeing early signs of potential capitulation as that ratio represents an important moderation from peaks of 4:1 seen two days ago, but a top British bank points out that institutional volume hit its highest on GBPUSD in two years as the pair broke $1.54. The breakdown may add further fuel to the GBP sell-off as commercial hedgers rush to protect against further weakness and large speculators press their bets.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.