Traders short GBP/USD above 1.2600

Forex sentiment update

US dollar depreciated in the last week against most major currencies including British pound, Australian dollar, and Canadian dollar, and traders are buying into the USD weakness. GBP/USD sentiment went from 61% short to 67% short as 2 out of 3 IG clients are now short the pair. Also, USD/CAD sentiment went from 60% short to 72% long in just the last week of trading.

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USD/CHF continues to show a large long dollar position as well with the pair exhibiting 85% long sentiment - off from 89% last week.

GBP/USD historical prices

How client sentiment works

Client Sentiment shows the percentage of IG client accounts with open positions that are currently long or short. If the majority of client accounts with open positions are long a given market, then they expect the price to rise; if the majority is short, then they expect it to fall. (Values taken using IG's Client Sentiment measure as of the previous day's close.)

Trend followers might go with sentiment, while contrarians would tend to go against the trend. For example, a 65% long measure in EUR/USD could reflect a buying opportunity for trend followers or a selling opportunity for contrarians.

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EUR/USD sentiment - 53% short

Last week's sentiment: 67% short

Euro shorts lightened in the last week with EUR/USD prices coming down from their highs. A trip back to 1.1100 could be cause for a short sentiment resurgence, while backtracking to 1.0900 or lower could cause sentiment to flip.

GBP/USD sentiment - 67% short

Last week's sentiment: 61% short

British pounds and euros have taken turns rallying against the dollar, and it's definitely been GBP's turn in recent trade as GBP/USD prices have ascended to new highs since April 2022. Traders think 1.2500 is more likely than 1.3000 at the moment, but GBP/USD has journeyed north of 1.3500 as recently as January 2022.

USD/CHF sentiment - 85% long

Last week's sentiment: 89% long

USD/CHF has just barely bounced back from last week's lows - lows for the pair going back to January 2021 - and long sentiment in the pair has only reduced from 89% to 85% - a still overwhelming number. Swiss franc has been a bit of an under-the-radar strong currency of late, but traders think the US dollar could take back some of that strength.

USD/JPY sentiment - 56% short

Last week's sentiment: 60% short

USD/JPY has traded around 135.00 as if it was a magnet here in 2023 - venturing as high as 138.00 or as low as 127.00 only to come back to 135.00. Japanese yen sentiment does not seem to be strong one way or another until the pair diverges from 135.00.

AUD/USD sentiment - 51% long

Last week's sentiment: 70% long

A 200 pip rally has worked wonders for relieving long sentiment in AUD/USD as the pair rising from 0.6600 to 0.6800 has coincided with long sentiment going from 70% to just 51%. Traders now look for a next move either to 0.7000 or back down to 0.6600.

USD/CAD sentiment - 72% long

Last week's sentiment: 60% short

Canadian dollar sentiment travelled further than any other major currency against the US dollar over the last week - going from 60% short to 72% long. This shift in sentiment from short USD/CAD to long coincides with a move in the pair from above 1.3600 to below 1.3400.