Sentiment Warns of British Pound Pullback
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GBPUSD: Retail trader data shows 35.5% of traders are net-long with the ratio of traders short to long at 1.81 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.7% higher since then. The number of traders net-long is 6.0% higher than yesterday and 7.5% higher from last week, while the number of traders net-short is 4.6% lower than yesterday and 8.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
--- Written by Christopher Vecchio, CFA, Senior Currency Strategist
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