Pound under threat after the Easter holiday,
- The dollar has emerged as the victor after long Easter weekend as investors rushed to buy green buck facing geopolitical uncertainties in the Middle East, economic weakness in the Eurozone, Brexit uncertainties in the UK and stronger U.S. economy, which is diverging from the rest of the world.
- GBP/USD sharply declined yesterday after facing hurdle around 1.302 area. The pound is currently trading at 1.292 against the USD, and our calculations suggest that the pair remains open to further decline.
- Retail sentiment points to bearish bias, however, positions have reached somewhat extreme level.
- 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 a contrarian indicator since retail positioning moves in the opposite direction to market movements.
- As of today, according to data from IG markets, 72 percent of the retail positions are on the buy side in GBP/USD, while 28 percent are bearish. That gives the pair a bearish bias.
- Calculations suggest that GBP/USD would reach the following targets; 1.285 and 1.272