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16 Sep 2013
Flash: GBP/USD rally over done – BMO
FXstreet.com (London) - Stephen Gallo, European Head of FX Strategy at BMO Financial Group suggest the GBP/USD rally is over done.
Key Quotes:
“A simple glance at the recent move higher in GBP/USD, taken alongside the change in net speculative positioning, would appear to suggest that the rally in the pair is overdone. However, the anecdotal evidence suggests that real official money participants have probably been a very important force on the bid side of late, whilst systematic funds are still largely quite short of the GBP”.
“Moreover, what the IMM data tell us is that long positioning in the GBP has not increased in a major way yet, suggesting that a large chunk of the move higher in GBP/USD has been a result of some segments of the leveraged money community cutting shorts, but not necessarily opening new longs to the same degree”.
“Capitulation on the systematic side of the speculative community alongside additional positive UK macro economic data could in fact mean further upside in GBP/USD is likely before the cycle turns”.
Key Quotes:
“A simple glance at the recent move higher in GBP/USD, taken alongside the change in net speculative positioning, would appear to suggest that the rally in the pair is overdone. However, the anecdotal evidence suggests that real official money participants have probably been a very important force on the bid side of late, whilst systematic funds are still largely quite short of the GBP”.
“Moreover, what the IMM data tell us is that long positioning in the GBP has not increased in a major way yet, suggesting that a large chunk of the move higher in GBP/USD has been a result of some segments of the leveraged money community cutting shorts, but not necessarily opening new longs to the same degree”.
“Capitulation on the systematic side of the speculative community alongside additional positive UK macro economic data could in fact mean further upside in GBP/USD is likely before the cycle turns”.