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GBPUSD – A substantial shift in retail forex sentiment suggests that the British Pound may trade to further lows against the US Dollar and other major counterparts.
Trade Implications – GBPUSD: Crowds have remained short the British Pound since the pair set an important low and crossed above $1.5200 in July, but long interest has surged 62% since last week and short positions have fallen 9%.
Our purely sentiment-based Momentum2 trading strategy sold GBPUSD from $1.6451 on the important turnaround. And indeed our Senior Technical Strategist warns that the larger GBP rally may fail if it closes below key support.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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