FxWirePro: Daily Commodity Tracker - 21st March, 2022 
GBP/USD on the run,
- After bottoming around 1.286 area, GBP/USD is recovering on the back of a weaker USD, as rampant speculation over a rate cut by the U.S. Federal Reserve is weighing on the dollar. The pair is currently trading at 1.304 area, up 180 pips since last week’s bottom.
- With GBP/USD steadily climbing higher, many traders must be asking themselves - should we get in the ride higher.
While the par has the potential to move higher on positive news and further weakness in the USD; we would like to suggest caution.
- Calculations suggest that GBP/USD does have the potential to move higher but it also suggests that gains are likely to remain capped below 1.31 handle. The par is likely to run into sellers as to approaches 1.308 area.
- Calculations also suggest that a break is required above 1.325 area to ebb selling pressure and more importantly above 1.312 area in the shorter term. As long as 1.312 handle holds, it remains likely that GBP/USD would test January low around 1.275 area.
Retail sentiment also favors a bearish GBP/USD,
- 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 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.
- According to data from IG markets, 63 percent of the retail positions are long on GBP/USD, which gives the pair a bearish bias.
