GBP/USD: Pound set to get lively this week with Thursday’s parliamentary elections
Retail sentiment shifts from last week’s majority long 56%, CoT moves towards the middle.
GBP/USD Technical analysis, overview, strategies, and levels
It’s a big week for the pound, and hence GBP/USD’s price is in for wild swings given this Thursday’s UK parliamentary elections, and all the volatility expected heading into the event as well with the latest weekend election polls showing a Conservative lead over Labour of between 8 and 15 points, but where they could be short of a majority. Furthermore, a Conservative victory may be already priced in, and hence could be at risk of a reversal on longs taking profit even if the results don’t show a hung parliament. There’s still dismal UK data and a trade deal with the EU to contend with in what follows should Brexit occur, and hence downside risks can’t be ruled out over the medium term. From a technical standpoint, its main indicators are flashing green following a strong week that took its price above both its 100-week and 200-week moving averages. A bull trend technical overview then on the weekly (and daily) outlook, but where breakout strategies are conforming to its volatile overview over contrarian reversal strategies.
IG client and CoT sentiment for GBP/USD
In sentiment, retail bias shifted from the start of last week at a majority long 56% to a now majority short 55% at the start of this week, due to longs taking profit and shorts initiating anticipating retracement back down. As for the larger speculative traders, last Friday’s CoT (Commitment of Traders) report showed a drop in majority short bias to 62% due to an increase in pound longs by 9,109 lots outdoing an increase in pound short positioning by only 2,583 lots.
GBP/USD Chart with retail and institutional sentiment
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