GBP/USD sentiment shift helps bullish case
Cable is on the rise as traders are fading the break higher; this may bode well for higher prices in the days ahead.
GBP/USD sentiment, price, and analysis
- GBP/USD trading at its best levels since early June
- Client position changes supportive of further gains
The British pound is rallying versus the US dollar, and with broad USD weakness becoming a central theme we may see further upside in GBP/USD in the days ahead. Recent changes in trader positioning data further backs the notion a breakout may be sustainable.
GBP/USD IG Client Sentiment
The IG Client Sentiment index (IGCS) show retail traders selling into multi-week highs, with only 41.55% net-long. The number of traders net-long is 6.60% lower than yesterday and 6.37% lower from last week, while the number of traders net-short is 28.14% higher than yesterday and 9.40% higher from last week. This suggests that traders aren’t so much lessening their long positions but outright shorting the pair.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short and increasing these bets suggests GBP/USD prices may continue to rise.
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GBP/USD IGCS Chart
GBP/USD technical outlook
Supporting the sentiment outlook is the fact that cable is trading at its best levels since the early part of June. It is also trying to cross above the 200-day moving average (MA), a threshold it has struggled with on a few occasions since April. A daily close above the long-term moving average could quickly lead to a rise to the June high at 12,813, where we will have to evaluate whether it will take out resistance (strong momentum) or turn back lower again (weakening momentum).
GBP/USD daily chart
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