FxWirePro: GBP/USD open to further decline; retail sentiment points to bearish bias

Pound faces selling pressure, despite today’s jump,

• The major focus for the pound is on Brexit and how it would be shaping under new Prime Minister Boris Johnson, who was officially elected as the leader of the Conservative Party at this week’s election.
• Retail sentiment points to the continuation of bearish bias.

Retail sentiment:

• The sentiment reports from IG Markets, which is a UK-based company providing trading in financial derivatives such as contracts for difference and financial spread betting, points to bearish bias in the GBP/USD.
• IG markets’ retail positions data provide a glimpse to retail traders’ positions, which are largely used as a contrarian indicator since retail positioning moves in the opposite direction to market movements.
• As of today, according to data from IG markets, 74 percent of the retail positions are on the buy-side in GBP/USD, while 26 percent are bearish. That gives the pair a bearish bias.

Trade idea:

• Calculations suggest that GBP/USD would reach the following targets; 1.22 and 1.19. The exchange rate is currently at 1.248 area.