FxWirePro: GBP/USD tests key trend line ahead of vote; retail sentiment favors bears

One trend line breaks, another could follow,

• As a key trend line shows in the graph, which has been in place since February this year, failed to support the pound against the USD amid a stronger dollar and Brexit uncertainties, as expected,  sterling has declined to test another trend line, which should provide support around 1.295-1.3 area.
• The current trend line has been in place since November last year and has lent support to pound four times to GBP/USD exchange rate is testing the line.
• The focus remains on Brexit voting later in the day, as Prime Minister Theresa May would present one of her deals on the table for the third time. And according to consensus, the parliament would reject her agreement for the third time as Mrs. May’s coalition partner DUP of Northern Ireland has announced that they would not support Mrs. May’s agreement.

The retail sentiment in favor of the bears,

• 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, strongly suggest that the pound is likely to move lower.
• IG markets’ retail positions data provide a glimpse to retail traders’ positions, which are largely used a contrarian indicator since retail positioning moves in opposite direction to market movements.
• As of today, according to data from IG markets, 70 percent of retail positions are bullish on GBP/USD, while only 30 percent are on the short side, suggesting further downside possibility.