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British Pound Likely to Fall, but Caution Advised

British Pound Likely to Fall, but Caution Advised

David Rodriguez, Head of Product
British Pound Likely to Fall, but Caution Advised

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

GBPUSD– Retail FX traders continue to buy into British Pound weakness versus the US Dollar, and a contrarian view of ‘crowd’ sentiment warns that further GBP/USD losses are likely. From a risk-to-reward perspective, however, we see key reasons for why traders might wait to sell the British Pound. Namely: extremely stretched positioning warns of the potential for sharp near-term rallies.

Of course sentiment extremes are only clear in hindsight, and we may ourselves wait for a substantive turn in retail FX trader sentiment to call for a larger GBP bounce.

See next currency section: USDJPY - Forex Sentiment Turns on a Dime - Watch Key Yen Risk

--- Written by David Rodriguez, Senior Strategist for DailyFX.com

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Contact David via Twitter at http://www.twitter.com/DRodriguezFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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