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GBPUSD–Retail forex traders continue to buy aggressively into British Pound weakness, and a contrarian view of popular sentiment leaves us firmly in favor of selling the GBP/USD.
Our data shows there are an impressive 2.4 open positions long the GBP/USD for every one that is short—matching extremes seen through October as the Sterling traded into notable short-term lows. It’s possible that such heavily one-sided positions could again coincide with a near-term bounce. Yet such extremes are, by definition, only clear in hindsight.
As long as crowds continue to buy, we will watch for further GBP weakness.
See next currency section: USDCAD - Crowd Sentiment Continues to Favor USD/CAD Gains
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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