British Pound Likely to Test Critical Lows
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GBPUSD –One-sided retail FX trader positioning warns that the Sterling may continue to trade into fresh lows versus the resurgent US Dollar.
Trade Implications – GBPUSD: Our data shows that approximately 55 percent of traders in our sample are currently long the GBP versus the USD, which gives us a modestly bearish contrarian trading bias. It’s nonetheless important to note that this is a significant pullback from the 70 percent we saw two months ago. The moderation suggests that momentum will slow as the Sterling approaches critical lows near $1.60.
A sustained flip towards crowd selling would help confirm a potentially important GBPUSD price low. And indeed a GBPUSD break above key trendline resistance favors a larger correction higher.
See next currency section:USDJPY - US Dollar Predicted to Test Highs versus Yen
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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