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British Pound Likely to Trade Lower

British Pound Likely to Trade Lower

David Rodriguez, Head of Product
British Pound Likely to Trade Lower

Why and how do we use the SSI in trading? View our video and download the free indicator here

GBPUSD – A recent shift in retail forex trader sentiment suggests that the British Pound may have set an important near-term top through recent price action. Last week we noted the opposite—a sharp turn in crowd positions favored GBP/USD gains. Clearly that call was late, and when the facts change we need to change with them.

Our data shows there are currently 1.9 open GBP/USD-long positions for every one that is short, and a contrarian view of crowd sentiment favors further declines. Indeed, this represents a substantive shift from just eight days ago when the same ratio was 1.2:1. If everyone is buying, we typically look to do the opposite and sell. The clear caveat is that there is risk the GBP/USD will instead stick to a tight range. Until sentiment shifts once again, however, the big-picture view remains bearish.

See next currency section:USDCAD - Canadian Dollar Hits the Skids, Losses Likely

--- 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.

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