British Pound Forecast Remains Firmly Bearish
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GBPUSD– Aggressively one-sided retail forex trader positioning warns that the British Pound will likely fall further versus the US Dollar. Last week we noted an aggressive turn in ‘crowd’ sentiment as a key reason the GBP/USD could weaken further, and indeed positions have only grown more extreme as the Sterling fell 200+ points versus the Greenback.
Our data now shows a remarkable 70 percent of open GBP/USD positions in our sample are long; a contrarian view leaves us firmly bearish. The only caveat is straightforward—retail positions are often at their most one-sided at major market turns. And indeed, our Speculative Sentiment Index shows the largest ‘crowd’ long position since the GBP/USD reversed higher off of $1.41 mark just one month ago.
Such extremes are only clear in hindsight, however; until we see concrete signs of a sentiment shift we will remain in favor of selling into GBP/USD weakness.
See next currency section:USDCAD - Canadian Dollar May Offer Selling Opportunity at Range Lows
--- 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.