Hedge Funds' Sterling Bet: A Risky Gamble?A surge in bullish bets on the British pound sterling by hedge funds and other asset managers has ignited concerns about a potential market upheaval. Aggressive positioning on the currency has reached a 10-year high, leaving it vulnerable to a sharp correction should the Bank of England (BoE) decide to cut interest rates this week.
The data, sourced from the Commodity Futures Trading Commission, reveals a dramatic increase in net-long positions on sterling over the past month. This bullish sentiment has been fueled by a combination of factors, including relatively high interest rates, signs of economic improvement, and the perceived stability of the UK government. As a result, the pound has gained nearly 1% against the US dollar since the start of the year and reached a one-year high earlier this month.
However, the market's optimism may be misplaced. The BoE's monetary policy decision on Thursday remains a significant uncertainty, with market pricing indicating an equal chance of a rate hike or a cut. If the central bank opts to lower interest rates to stimulate economic growth, it could have a severe impact on the pound.
The heightened bullish sentiment among investors has created a scenario where even a hint of dovishness from the BoE could trigger a rapid unwinding of positions and a sharp decline in sterling.
The potential for a significant market correction has prompted concerns among analysts and investors. Some argue that the current level of bullishness is excessive and that the market is underpricing the risk of a rate cut. They caution that a sudden shift in sentiment could lead to significant losses for those holding long positions on the pound.
As the market awaits the BoE's decision, volatility is expected to remain high. The outcome of the meeting will undoubtedly have far-reaching consequences for the pound and the broader global financial markets. If the central bank surprises the market with a rate cut, it could be a wake-up call for investors who have become overly complacent about the currency's prospects.
Ultimately, the recent surge in bullish sterling bets highlights the inherent risks of relying on market consensus. While past performance is not indicative of future results, the current level of optimism surrounding the pound raises questions about the sustainability of the currency's strength. As the old adage goes, "buy low, sell high," but in this case, investors may be finding themselves on the wrong side of the trade.
Sterlingdollar
Pound Stumbles on Jobs Data, Raising Specter of BoE Rate Cuts
The British pound (GBP) took a tumble today after the release of disappointing UK employment data, fueling speculation of a potential interest rate cut by the Bank of England (BoE) in June.
The data revealed a rise in unemployment for the second month running. March saw the jobless rate reach 4.3%, surpassing the previous month's reading of 4.2% and confirming fears of a slowing British labor market. This setback coincided with wage growth (excluding bonuses) stalling at 6% for the three months ending in March, defying expectations of a slight decline to 5.9%.
Yael Selfin, Chief Economist at KPMG UK, believes this uptick in unemployment is likely a precursor to a slowdown in wage growth. She suggests that the UK's recent economic struggles might deter businesses from hiring new employees, consequently leading to a softening of wage pressures in the coming months.
This scenario strengthens the case for an imminent interest rate cut by the BoE. With inflation remaining a pressing concern, the central bank is facing mounting pressure to lower its base rate in order to stimulate economic activity.
Selfin elaborates, stating that if upcoming data on wage growth aligns with her forecast of a modest increase, insufficient to prevent a downward trajectory in annual pay, it could trigger a more dovish stance within the Monetary Policy Committee (MPC) ahead of their crucial June meeting. A dovish stance signifies a central bank leaning towards lowering interest rates.
Market Response and Unfolding Narrative
The pound's depreciation reflects a shift in investor sentiment. The initial optimism surrounding the BoE's hawkish stance on interest rates, intended to combat inflation, seems to be waning. The prospect of a potential rate cut has dampened investor confidence in the pound, leading to its current decline.
Uncertainties and the Road Ahead
The BoE now finds itself in a precarious position. While inflation remains a priority, the rising unemployment figures present a new challenge. The central bank will need to carefully navigate this complex situation.
Key factors to watch in the coming weeks include:
• Upcoming Wage Growth Data: If wages confirm Selfin's prediction of a subdued rise, it could significantly boost the case for a rate cut.
• The BoE's Rhetoric: The language used by the BoE in its upcoming communications will be closely scrutinized for any hints regarding the likelihood of a June rate cut.
• Global Economic Conditions: Broader global economic developments, particularly in the US and Europe, could also influence the BoE's decision.
Conclusion
The pound's recent slump serves as a stark reminder of the delicate balancing act the BoE faces. The bank's June meeting will be pivotal, with its decision on interest rates potentially shaping the course of the UK economy and the future trajectory of the pound.
GBPUSD Longer Term ShortAs per the video the pound has been in decline over the past years so am looking for longer term shorts. On the weekly price action looks toppy and there's a good risk reward potential for entering short now looking for a retracement to 50% or even further. Whether it will ever reach parity or simply bottom out and climb remains to be seen in the future.
GBPUSD long/Buy ideaGBP/USD needs balanced GDP data to climb.
The pound has been positive for several months, benefiting from the surprising economic strength of the UK. On the other hand, the US dollar has fallen behind, but the recent concerns about the global economy have moved the flows towards the safe dollar.
Markets are mostly bearish today, with the only catalyst for their movement being non-farm payrolls data.
In order to see the correction of the US dollar, despite the disappointment, we need below $200,000 to force the Federal Reserve to stop raising interest rates. But not so weak that it can ensure the flow of orders in US dollars.
Weak wage growth will also help.
In such a case, GBPUSD has the space to increase levels up to 1.252.
But to enter the purchase transaction, one should wait for the failure of the 1.245 level to enter the transaction at this level in the pullback.
GBPUSD, Weekly analysis Feb 6-10, 2023The pound against the Dollar faced a bearish momentum last week, a price zone of 1.24 again proved a strong resistance for this pair and
sent down the price s from 1.24 to 1.20 last week,
Here is also the same reason we are seeing the weekend Pound and strong dollar behind the last week's sellers
The day chart displays a breakout trade during the last week out of the Rising wedge,
this Friday's breakout move may look forward to retouching the breakout zone of the 1.23 price mark this week, before making a further downward move
GBP's Monetary policy and GDP reports are awaiting on February 2nd week respectively on Thursday and Friday
these reports may play a role in strengthening the pound, We have to wait for the reports this week
Joe Gun2Head Trade - GBPUSD grinding higher?Trade Idea: Buying GBPUD
Reasoning: Grinding higher
Entry Level: 1.2239
Take Profit Level: 1.2334
Stop Loss: 1.2196
Risk/Reward: 2.19:1
Disclaimer – Signal Centre. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
GBPUSD - Bullish channelGBPUSD - Intraday - We look to Buy at 1.2075 (stop at 1.1990)
Although the bears are in control, the stalling negative momentum indicates a turnaround is possible. This is positive for sentiment and the uptrend has the potential to return. The trend of higher lows is located at 1.1900. The preferred trade is to buy on dips.
Our profit targets will be 1.2325 and 1.2660
Resistance : 1.2660 / 1.3295 / 1.3750
Support: 1.2110 / 1.1770 / 1.1490
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GBPUSD - Bulls in controlGBPUSD - Intraday - We look to Buy at 1.1970 (stop at 1.1875)
Although the bulls are in control, the stalling positive momentum indicates a turnaround is possible. We are trading at overbought extremes. A lower correction is expected. The bias is still for higher levels and we look for any dips to be limited. We therefore, prefer to fade into the dip with a tight stop in anticipation of a move back higher.
Our profit targets will be 1.2235 and 1.2660
Resistance: 1.2110 / 1.2660 / 1.3295
Support: 1.1760 / 1.1490 / 1.1215
Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Signal Centre’). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Signal Centre.
$GBPUSD approaching a level of polarityWatch this level between 1.20 - 1.2150. this was a massive support level before the breakdown which saw Sterling almost move to Parity with the dollar. Recent dollar weakness and some political stability have pushed the pound higher but i think this strength will eventually fade with the pound weakening again vs. the dollar. A retest of 1.15 could be on the cards
Joe Gun2Head Trade - Gap filled on GBPUSDTrade Idea: Selling GBPUSD
Reasoning: Filled the overnight gap, downtrend expected to continue.
Entry Level: 1.1378
Take Profit Level: 1.1151
Stop Loss: 1.1425
Risk/Reward: 4.94:1
Disclaimer – Signal Centre. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
Joe Gun2Head Trade - GBPUSD Breaking higherTrade Idea: Buying GBPUSD
Reasoning: GBPUSD Breaking out
Entry Level: 1.1542
Take Profit Level: 1.1861
Stop Loss: 1.1422
Risk/Reward: 2.66:1
Disclaimer – Signal Centre. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
Joe Gun2Head Trade - Playing a small range on GBPUSDTrade Idea: Buying GBPUSD
Reasoning: Gap at 1.1170 providing support. Hoping for a quieter day in the UK Government?!
Entry Level: 1.1216
Take Profit Level: 1.1430
Stop Loss: 1.1167
Risk/Reward: 4.3:1
Disclaimer – Signal Centre. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
Joe Gun2Head Trade - Sterling weakening, lower prices expected.Trade Idea: Selling GBPUSD
Reasoning: Sterling weakening, lower prices expected.
Entry Level: 1.1163
Take Profit Level: 1.0933
Stop Loss: 1.1245
Risk/Reward: 2.89:1
Disclaimer – Signal Centre. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
GBP/USD weekly chart: falling wedge headed to 37-year support?The British pound ( GBP/USD ) hit an intraday low of 1.1406, temporarily breaking below Covid-20 lows and hitting the lowest level in 37 years, before recovering to 1.147 as of this writing.
The GBPUSD weekly chart reveals intriguing long-term patterns:
The major long-term trend is represented by a falling wedge, with the lower support line set by January 2009's and October 2016's lows and upper resistance line by November 2007's and May 2021's highs.
The ultra-ten-year falling wedge contains two lateral ranges (May 2009-June 2016 and July 2016-September 2022), both characterised by a similar 20% width.
The long-run falling wedge's direction collides with the all-time low and support level of 1.051 hit in February 1985.
If 1.14 defines a new multi-year resistance level and a new 20% side range is established, the next long-term support could be as lows as 0.95.
Idea written by Piero Cingari, forex and commodity analyst at Capital.com
Joe Gun2Head Trade - Short term bullish channel on GBPUSDTrade Idea: Buying GBPUSD
Reasoning: Short term bullish channel on GBPUSD
Entry Level: 1.2196
Take Profit Level: 1.2290
Stop Loss: 1.2153
Risk/Reward: 2.3:1
Disclaimer – Signal Centre. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
Bias is still for lower levels on GBPUSDGBPUSD - Intraday - We look to Sell at 1.1930 (stop at 1.1995)
Buying pressure from 1.1760 resulted in prices rejecting the dip. The bias is still for lower levels and we look for any gains to be limited. This is negative for sentiment and the downtrend has potential to return. We therefore, prefer to fade into the rally with a tight stop in anticipation of a move back lower.
Our profit targets will be 1.1750 and 1.1500
Resistance: 1.1840 / 1.2015 / 1.2155
Support: 1.1500 / 1.1370 / 1.1000
Risk Disclaimer
The trade ideas beyond this page are for informational purposes only and do not constitute investment advice or a solicitation to trade. This information is provided by Signal Centre, a third-party unaffiliated with OANDA, and is intended for general circulation only. OANDA does not guarantee the accuracy of this information and assumes no responsibilities for the information provided by the third party. The information does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
You accept that you assume all risks in independently viewing the contents and selecting a chosen strategy.
Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, Oanda Asia Pacific Pte Ltd (“OAP“) accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore customers should contact OAP at 6579 8289 for matters arising from, or in connection with, the information/research distributed.'
No sign that this bearish momentum on GBPUSD is falteringGBPUSD - Intraday - We look to Sell at 1.1990 (stop at 1.2070)
Although the bears are in control, the stalling negative momentum indicates a turnaround is possible. There is no sign that this bearish momentum is faltering but the pair has stalled close to a previous swing low of 1.1875. We are trading at oversold extremes. A higher correction is expected. The bias is still for lower levels and we look for any gains to be limited. Preferred trade is to sell into rallies.
Our profit targets will be 1.1765 and 1.1500
Resistance: 1.2015 / 1.2155 / 1.2275
Support: 1.1840 / 1.1500 / 1.1330
Risk Disclaimer
The trade ideas beyond this page are for informational purposes only and do not constitute investment advice or a solicitation to trade. This information is provided by Signal Centre, a third-party unaffiliated with OANDA, and is intended for general circulation only. OANDA does not guarantee the accuracy of this information and assumes no responsibilities for the information provided by the third party. The information does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
You accept that you assume all risks in independently viewing the contents and selecting a chosen strategy.
Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, Oanda Asia Pacific Pte Ltd (“OAP“) accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore customers should contact OAP at 6579 8289 for matters arising from, or in connection with, the information/research distributed.'
GBPUSD:Correction over?!GBPUSD
Intraday - We look to Sell at 1.2632 (stop at 1.2756)
Although the bulls are in control, the stalling positive momentum indicates a turnaround is possible. Daily signals for sentiment are at overbought extremes. This is negative for short term sentiment and we look to set shorts at good risk/reward levels for a further correction lower. The hourly chart technicals suggests further upside before the downtrend returns. Preferred trade is to sell into rallies.
Our profit targets will be 1.2300 and 1.2210
Resistance: 1.2800 / 1.3000 / 1.3160
Support: 1.2210 / 1.2000 / 1.1500
Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Signal Centre’). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Signal Centre.
GBPUSD: Markets continue to shun sterlingGBPUSD
Intraday - We look to Sell at 1.2420 (stop at 1.2550)
We are trading at oversold extremes. A higher correction is expected. The bias is still for lower levels and we look for any gains to be limited. We look to sell rallies.
Our profit targets will be 1.2055 and 1.2000
Resistance: 1.2500 / 1.2800 / 1.3000
Support: 1.2210 / 1.2000 / 1.1500
Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Signal Centre’). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Signal Centre.
GBPUSDGU has rejected our 4 hour resistance and 78.6% fib level. Moreover is still in our ascending channel. I believe price will push up towards the 1.33277 level, which indicates it will liquidate the shorts at 1.33.
This also gives me a stronger bias that this trade will be profitable; the DXY looks bearish as well..
The orange circle is my take profit.
Remember when placing a trade to be only risking a maximum of 1%.
This will help every trader in the long term.
I will keep you updated on this trade.
Take care.