GBPUSD – Retail FX crowds continue buying aggressively into British Pound tumbles, and our sentiment-based trading strategies remain positioned for further declines.
Trade Implications – GBPUSD: Our proprietary SSI data shows that crowds are now their most net-long GBPUSD since the pair set a multi-year low back in March. That’s obviously a warning sign that the move might be overdone (and GBP could bounce), but context is everything.
It’s entirely possible that the British Pound set a key high on May 1 at $1.5605, and the fact that USD volatility prices continue to surge suggests that professional/institutional traders are positioning for further GBPUSD weakness. We remain in favor of selling any noteworthy GBP bounces as it holds key highs.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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