GBP/USD uptrend may prolong as sterling reversal bets rise
GBP/USD extended gains after taking out a long-term trendline from 2007. Retail trader positioning hints that the British pound may have more room to rally ahead.
GBP/USD technical analysis: talking points
- GBP/USD continues to climb above 2007 trendline
- Retail trader positioning hint the pound may rise next
- Upside momentum does seem to be fading however
British pound technicals
On the weekly chart, GBP/USD continues to push above a long-term falling trendline going back to 2007. From a technical standpoint, more gains could be in store given confirmation of the breakout at this point. Now, the prices are approaching the upper edge of the $1.3504 to $1.3836 inflection zone established in 2009. A push above this zone could pave the way for a retest of 2018 highs between $1.425 and $1.4377.
Find out more about trading GBP/USD and forex
Zooming in on the daily chart can offer a better picture of the obstacles to watch out for in the near term. Negative relative strength index (RSI) divergence has been showing fading upside momentum, which can at times precede a turn lower. This is as GBP/USD climbed above the midpoint of the Fibonacci extension at $1.3711. That has exposed the 61.8% level at $1.3955. Should prices turn lower, keep a close eye on rising support from March. The latter may reinstate the focus to the upside in the event fading momentum transpires into a pullback.
GBP/USD IG client sentiment outlook
Meanwhile, IG client sentiment (IGCS), which is typically a contrarian indicator, paints a picture that may support the pound ahead. The tool showed on 8 February that about 34% of retail traders were net long GBP/USD. Downside exposure had increased by 14.92% and 35.90% over a daily and weekly basis respectively.
Simultaneously, upside bets climbed by 11.57% while decreasing 30.28% over identical time frames. The fact traders are net short suggests prices may continue rising. The combination of current sentiment and recent changes offers a stronger bullish contrarian trading bias. From a psychological perspective, this could mean a dynamic where traders continue increasingly betting on a top as prices climb.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
