British Pound Looks likely to Hold Key Support
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GBPUSD– Retail FX traders are once again net-long the British Pound versus the US Dollar, and a contrarian view of ‘crowd’ sentiment points to further weakness. Last week we admittedly said the opposite as retail FX was net-short. Yet we took a measured approach to calling for GBP gains as the pair continued to trade below key resistance.
We will similarly take a measured approach in now calling for GBP/USD weakness—watch critical Sterling support near post-Brexit lows given clear risk of a bounce. The fact remains that retail traders will broadly tend to do well in slow-moving markets, and a hold of key support would keep the Sterling in a low-volatility trading range. Only a substantive shift in market trading conditions would change our mostly-neutral GBP-trading bias.
See next currency section: SPX500 - US S&P 500 Shows Clear Risk of Turn Lower
--- Written by David Rodriguez, Senior Strategist for DailyFX.com
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