British pound may rise as GBP/USD short bets build up

The British pound may rise against the US dollar as retail investors continue selling into the price trend. Will GBP/USD complete a bullish falling wedge chart pattern breakout?

British pound IG client sentiment - talking points

  • British pound may rise as short bets increase
  • GBP/USD confirms falling wedge breakout
  • 2019 resistance seems key technical barrier

GBP/USD IG client sentiment outlook

The British pound could be getting ready to extend recent gain against the US dollar based on signals from IG client sentiment (IGCS) gauge. On 8 July, the IGCS gauge implied that about 47% of retail investors were net long GBP/USD. This is as exposure to the downside increased by six percent and two percent over a daily and weekly basis respectively. Net long bets fell by five percent and six percent over the same periods.

We typically take a contrarian view to crowd sentiment, and the fact traders are net short hints GBP may keep rising. Recent adjustments in positioning offer a stronger bullish GBP/USD contrarian trading bias. From a psychological standpoint, this could speak to investors attempting to increasingly pick the next topping point in the British pound.

Learn more about forex and the dynamics behind currencies such as the British pound

GBP/USD Client Positioning

British pound technical analysis

A GBP/USD push above the top of a falling wedge, a bullish chart pattern, seemingly bolsters the case for gains. The pair confirmed an upside breakout in late June and the trajectory could see sterling retest peaks from last month’s key resistance between $1.274 and $1.2813. Taking this range out may open the door for resuming the bounce off March’s bottom.

However, falling resistance from December 2019 could maintain the dominant downtrend – blue parallel lines on the daily chart below. If this occurs, a turn lower would place the focus on rising support from May – the red line on the chart. Closing under this trend line, as well as $1.2252, could see the pair set course to revisit the May low at $1.2077. Beyond that level sit lows from 2016 and 2017.

Should prices extend gains in the aftermath of the falling wedge breakout however, as IGCS seems to be hinting is more likely, the British pound could push towards March 2020 highs. This area, between $1.3097 and $1.32, could stand in the way as resistance. A hold at this range may open the door to a reversal where the falling trend line from 2019 could stand in the way as new support.

Stay informed of forex market developments through IG's news and trade ideas

GBP/USD daily chart

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

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.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices 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…

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.