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GBPUSD – Retail forex traders are their most short the British Pound against the US Dollar since it set an important top in February. One-sided sentiment extremes warn that the pair may turn lower.
Trade Implications – GBPUSD: We rarely want to go against such a clear uptrend, but the fact that there are nearly 8 open positions short the GBP for every long warns that the rally may be overdone.
The clear caveat is that sentiment and price extremes are only clear in hindsight. Near-term our Senior Technical Strategist writes that a rally into $1.7300 remains possible, but a break below key support at $1.7000 would shift our focus lower.
See next currency section:USDJPY - Dollar May have Turned the Corner versus Yen
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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