Further downside open for GBP/USD,
- Our calculations suggest that GBP/USD is likely to decline further, however, it would be better for our readers to sell at correction, as the pair has declined for seven consecutive days since the bulls failed to clear resistance around 1.32 area and now trading close to support area (1.285-1.29).
- Brexit remains the most contentious issue when trading pound and every time positive news hit the market, the pound moves higher. The last jump in GBP/USD was on the back of news that Labour Party leader Jeremy Corbyn and British Prime Minister Theresa May was getting along well to secure an agreement. As such hope vanishes, so came the pound crushing down.
- If Brexit remains the key mover, then it is not really a good piece of news that Nigel Farage’s newly formed Brexit Party is topping the polls in the upcoming EU election.
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, 75 percent of the retail positions are on the buy side in EUR/USD, while 25 percent are bearish. That gives the pair a bearish bias.However, the positions are a bit on the extreme side, which suggests a correction.
Trade idea:
- Sell GBP/USD at current price and largely at correction close to 1.299 area, with a target of 1.27 area, and stop loss around 1.306 area.
