GBP/USD: risks skewed to the downside

Source: Dukascopy Bank SA
© Dukascopy Bank SA
"We continue to think the BoE remains uncomfortable with persistent pound strength and remain bearish on sterling."
- Barclays (based on Reuters)

Pair's Outlook

The latest rally of GBP/USD ended just before the Sterling hit the 50% Fibonacci retracement of the Aug 25-Sep 4 decline. Accordingly, the bias is to the downside, which is also confirmed by the majority of the technical indicators giving ‘sell' signals. However, in order to revisit the August low the Pound will have to penetrate the 200-day SMA at 1.5338 first. The bullish potential of the pair is currently limited by a dense supply area between 1.5491 and 1.5526.

Traders' Sentiment

There is still no significant difference between the amounts of bullish and bearish market participants. Right now 52% of traders are holding long positions and 48% are holding shorts. A similar situation is with the orders: 55% are to buy and 45% are to sell.

© Dukascopy Bank SA

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