British Pound May Drop, but Were Waiting for Bigger Shift in Sentiment
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GBPUSD – Retail forex traders remain long the British Pound versus the US Dollar, but a recent shift in positioning suggests that the GBP may be at a key turning point. Total open long positions fell 7 percent since last week while short positions rose by a comparable 6 percent.
The fact that traders remain net-long would normally leave us with a contrarian bearish trading bias. Yet it is likewise clear that many are reducing exposure ahead of the pivotal US FOMC rate decision. Risks remain modestly to the downside for the GBP/USD, but we would ideally see stronger crowd conviction before taking a strong trading bias.
See next currency section: USDJPY - We’ll Wait to See Major US Dollar Breakout versus the Yen
--- 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.