- The British pound has been prevented by the latest surge in COVID-19 delta infections, which has made traders welcome the possibility of more closures.
- Both GBP / JPY and GBP / USD has withdrawn from critical technical support, indicating that further damage may be limited.
- Recent changes retail trader positioning refer to the British pound mostly confused prejudice.
Dead cat bounce or another life?
“Freedom Day” has come and gone by this week, but the markets do not seem to be convinced that it marked the end of the UK pandemic. As the number of delta variants has picked up in recent weeks, the British pound has been hampered compared to its main counterparts as traders believe reopening measures could be reversed.
But now these data show it vaccines work as intended – Reducing tail risk outcomes, such as hospitalization and deaths – There is a cautiously optimistic mood among GBP crosses. Although it is not yet clear how the three main pairs will shake, clearly defined technical levels can help traders keep their risk before a new trend develops for Sterling.
GBP / USD RATE TECHNICAL ANALYSIS: AGENDA (March 2020 – July 2021) (CARD 1)
Earlier this week GBP /USD from the wider lateral range of 1.3660 to 1.4250 in force since the beginning of February, which included price measures from February. However, the decline in rates was quickly reversed as support began to play around the Fibonacci-level cluster. If a return to the multi-month interval indicates a false downturn, GBP / USD has not yet reversed the downward trend in May and June. More time is needed to understand whether this is simply the opposite of a reverse setback or a full reversal (which would eventually target a wider range, close to 1.4250).
IG Client Mood Index: GBP / USD RATE Forecast (July 22, 2021) (Figure 2)
GBP / USD: Retailers’ data show that 59.05% of traders are net long, the ratio of long to short traders is 1.44 to 1. The number of net long traders is 17.54% yesterday and 1.25% lower than last week, while the number of net-short traders is 25.84% higher than yesterday and 8.38% higher than last week.
We usually view the contradictory situation of the crowd, and the fact that traders are net long indicates a continued decline in GBP / USD prices.
Merchants are less than last week compared to last week. Recent mood swings warn that the current GBP / USD price trend may soon turn higher, despite the fact that traders will remain net long.
GBP / JPY RATE TECHNICAL ANALYSIS: AGENDA (MARCH 2020 – July 2021) (CARD 3)
GBP /JPY At the beginning of the week, interest rates sold quickly, falling back to a Fibonacci level of 148.41, from a low of 2020/7621% in 2020 and briefly breaking the low of 148.53 in March. But since Monday, it turns out that a bouquet of morning star candles has appeared, a pattern with a base of three candles. It is possible that prices have rebounded since May, following the all-time highs of July 2007 and August 2015. Like GBP / USD, more evidence is needed before confidence will take root in the 2020 peak of 156.61.
IG Client Mood Index: GBP / JPY Interest Forecast (July 22, 2021) (Figure 4)
GBP / JPY: Retailer data show that 43.29% of traders are net long, the ratio of short to long traders is 1.31 to 1. The number of net long traders is 19.32% yesterday and 26.22% higher than last week. if the number of net-short traders is 28.28% higher than yesterday and 15.84% less than last week.
We usually view the crowded situation and the fact that traders are short indicates an increase in GBP / JPY prices.
Positioning is more than short than yesterday, but less net-short than last week. The combination of the current mood and recent changes gives us another mixed GBP / JPY trading policy.
EUR / GBP RATE TECHNICAL ANALYSIS: AGENDA (MARCH 2020 – July 2021) (CARD 5)
No change from yesterday: “EUR / GBP interest rates remain highly volatile, effectively sideways from the end of February. In recent days, the pair broke above the resistance of the falling channel that had been in place since the beginning of May, nullifying the prospect that “a return to the lowest level of 0.8472 in April will take shape”. If the momentum indicators don’t find a sense of agreement, it could be one pair to keep away from in the days to come; there are clearer opportunities elsewhere. “
IG Client Mood Index: EUR / GBP Interest Forecast (July 22, 2021) (Figure 6)
EUR/ GBP: Retailer data show that 66.48% of traders are net long, the ratio of long to short traders is 1.98 to 1. The number of net long traders is 27.77% higher than yesterday and 11.69% lower than last week. the number of net-short traders is 37.34% lower than yesterday and 9.19% higher than last week.
Usually, we view the contradictory situation of the crowd and the fact that traders are net long indicates a continuing decline in EUR / GBP prices.
Positioning is longer than yesterday, but less than last week. The combination of the current mood and recent changes gives us even more mixed EUR / GBP trading prejudices.
– Written by Senior Currency Strategist Christopher Vecchio, CFA