Retail GBP-USD forex traders have sold aggressively into recent British Pound strength versus the US sollar and a contrarian view of crowd sentiment leaves us in favor of further GBP USD gains. The ratio of long to short positions in the GBPUSD stands at -1.30 as approximately 43% of traders are long. In detail, long positions are 14.8% lower than yesterday and 40.3% below levels seen last week. Short positions are 10.3% higher than yesterday and 30.5% above levels seen last week.
We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that the GBPUSD may continue higher. Current SSI is further net short than yesterday and from last week. The combination of current sentiment and recent changes gives a further bullish trading bias.
FX retail trading crowds continue to sell the US Dollar and Japanese Yen against major counterparts. We forecast further USD and JPY declines. Indeed, we believe that forex market conditions continue to favor selling US Dollar and Japanese Yen strength. There was a modest pullback in USD-long interest since last week, but as long as the majority of retail traders remain long US Dollars versus the Euro and other counterparts we remain in favor of USD weakness.
Our Euro forecast versus the US Dollar remains bullish as our proprietary retail forex trading sentiment indicator shows the majority of traders have sold aggressively into EUR USD strength. In fact, traders are at their most aggressively net-short EUR USD since the pair last traded below $1.30 in late October.
