GBPUSD – Retail forex traders are now net-short the British Pound against the US Dollar for the first time since January, and the sharp shift in sentiment confirms that this is likely the start of a larger topside correction.
Trade Implications – GBPUSD: Our trend-following Momentum2 first went long GBPUSD last week at $1.4918, took profits, and once again bought at $1.5137. We like the position from a number of angles. First, the GBPUSD has shown an important technical reversal at the key 61.8% Fibonacci retracement of its multi-year trading range. Secondly, we believe that the GBP has benefited from a classic case of “buy the rumor/sell the news” as it surged despite a change to the Bank of England’s policy remit. A hold above weekly lows of $1.5028 leaves us bullish.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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