Daily Technicals

GBP/USD Confirms Q1 Bottom, However, Upside Challenges Remain

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GBP/USD Price Analysis & News

  • GBP/USD Confirms Q1 Bottom, However, Upside Challenges Remain
  • IG Client Sentiment: GBP/USD

GBP/USD Confirms Q1 Bottom, However, Upside Challenges Remain

An impressive recovery throughout Q2 sees GBP/USD confirm a bottom from the Q1 sell-off. However, with upticks in the pair being met with corrective pullbacks, the pair looks set to be trading within a 1.24-1.28 range. That said, in the event of another rejection at the 1.28 handle, this could see GBP/USD look vulnerable to downside, provided that a double top is confirmed.

Chart 1: GBP/USD Rate Chart – Daily Timeframe (January to June 2020)

GBPUSD Price chart

Source: IG; Prepared by Justin McQueen

IG Client Sentiment: GBP/USD

GBPUSD: Retail trader data shows 42.3% of traders are net-long with the ratio of traders short to long at 1.36 to 1. The number of traders net-long is 9.2% lower than yesterday and 16.2% lower from last week, while the number of traders net-short is 6.4% lower than yesterday and 27.3% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBPUSD-bullish contrarian trading bias.

GBP/USD Confirms Q1 Bottom, However, Upside Challenges Remain

Wall Street IG Client Sentiment: Our data shows traders are now net-long Wall Street for the first time since Jun 29, 2020 when Wall Street traded near 25,707.30.

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