Sentiment Shifts, Pound May Rally
GBPUSD: Retail trader data shows 37.8% of traders are net-long with the ratio of traders short to long at 1.65 to 1. In fact, traders have remained net-short since Dec 28 when GBPUSD traded near 1.33732; price has moved 1.2% higher since then. The number of traders net-long is 7.0% lower than yesterday and 15.3% lower from last week, while the number of traders net-short is 0.7% higher than yesterday and 4.9% 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. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBPUSD-bullish contrarian trading bias.
--- Written by Dylan Jusino, DailyFX Research