British Pound Looks Likely to Rally Further
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GBPUSD– Retail FX traders are now net-short the British Pound versus the US Dollar for the first time since the pair set a key top near the $1.33 mark, and a contrarian view of ‘crowd’ sentiment leads us to watch for further GBP/USD gains. Our data has otherwise shown heavily one-sided sentiment in favor of buying into Sterling weakness.
It is possible that the more recent flip to selling may mark another short-term top—much as a similar flip preceded key reversals in the past several months of trading. And indeed a hold below key resistance at $1.3371 would keep the overall bearish trend intact. As it stands we will maintain a contrarian bullish bias, but a reversal and a further flip to crowd buying would quickly act as confirmation of a trend turnaround.
See next currency section: USDJPY - US Dollar Remains a Sell versus Japanese Yen
--- Written by David Rodriguez, Senior Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.