Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Sterling sentiment coming off extremes as GBP/USD tests resistance

Sterling is attempting a sixth weekly advance with GBP/USD eyeing resistance just as sentiment begins to wane. These are the levels that matter on the technical charts.

Pound Source: Bloomberg

Sterling sentiment, price and analysis

  • Sterling rallies to highest levels vs US dollar since April 2018
  • GBP/USD retail short positioning extends into multi-month extremes
  • Rally vulnerable as price approaches key technical resistance into $1.40

The British pound is attempting to mount the sixth consecutive weekly rally as Sterling surges to fresh multi-year highs. The advance may be vulnerable however with the price approaching the first major technical resistance barrier as retail sentiment extends to multi-month extremes - we’re looking for a reaction off this mark in the days ahead.

Sterling trader sentiment – GBP/USD price chart

Sterling trader sentiment – GBP/USD price chart Source: DailyFX
Sterling trader sentiment – GBP/USD price chart Source: DailyFX

A summary of IG client sentiment (IGCS) shows that 36.52% of traders are net-long GBP/USD as the price drifts into multi-year highs. The number of traders net-long is 0.08% lower than yesterday and 1.83% higher from last week while the number of trader net-short is also lower on whole, down 12.25% from yesterday and 9.36% from last week. We typically take a contrarian view to crowd sentiment and the fact traders are net-short suggests GBP/USD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week and the recent changes in sentiment warn that the current GBP/USD price trend may soon reverse lower despite the fact traders remain net-short.

Find out more about forex trading

Sterling price chart – GBP/USD weekly

Sterling price chart – GBP/USD weekly Source: TradingView
Sterling price chart – GBP/USD weekly Source: TradingView

Technical outlook

A breakout above a critical resistance barrier at $1.3675-$1.3743 last week has fueled a rally of more than 1.6% with the advance now testing the first major technical confluence at the 61.8% extension of the 2020 rally/2018 high-week close at $1.3955/97- looking for inflection off this zone with the immediate advance vulnerable while below.

Initial weekly support rests at the objective monthly open at $1.3711 with a weekly close below $1.3675 needed to suggest a more significant reversal is underway. A topside breach/close above this threshold would keep the focus on subsequent topside resistance objectives into the 50% retracement of the 2014 decline at the $1.43-handle.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps
Find out more

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off
Log in now

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform
Log in now

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Take advantage

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.