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GBPUSD – A substantial reversal in the British Pound produced a similarly significant turn in sentiment, and our retail FX positioning data points to further GBPUSD declines.
Trade Implications – GBPUSD: Last week we noted that a shift in crowd sentiment helped confirm an important Sterling turn lower, and indeed our sample shows that the trading herd is now net-long the GBPUSD for the first time since it traded near $1.55 in August, 2013.
The difficulty is now finding an attractive entry point for a short position. The GBPUSD has now fallen in 14 of the past 16 trading days, and momentum is clearly stretched. We remain bearish as long as price remains below $1.70, and there’s little significant support before June lows near $1.67.
See next currency section:USDJPY - Key Factors Favor a Much Larger USDJPY Breakout