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British Pound Plunges, and Declines not Over Just Yet

British Pound Plunges, and Declines not Over Just Yet

David Rodriguez, Head of Product
British Pound Plunges, and Declines not Over Just Yet

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

GBPUSD– Retail FX traders briefly turned net-short the British Pound versus the US Dollar, but the sharp decline following the Bank of England’s ‘Bazooka’ of monetary policy easing leaves traders once again net-long the GBP/USD. A contrarian view of ‘crowd’ sentiment leaves us in favor of selling into further weakness.

The key difficulty is simple—large speculative traders remain extremely net-short the British Pound. This in itself acts as a confirmation of a strong overall downtrend, and yet heavily one-sided positions warn of significant volatility ahead.

As long as retail FX traders remain short we will call for Sterling weakness. Traders should nonetheless act with caution given the potential for strong counter-trend moves.

See next currency section: USDJPY - Japanese Yen Sentiment at Extremes – What’s Next?

--- 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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