BUZZ-COMMENT-Sterling rallies off recent trend low on upbeat German data

Credit: REUTERS/Sukree Sukplang

GBP/USD, after hitting a low of 1.3054 on Monday, now finds itself back in the mid 1.31’s. This as Sterling traders remain focused on factors outside the UK.

July 29 (Reuters) - GBP/USD, after hitting a low of 1.3054 on Monday, now finds itself back in the mid 1.31’s. This as Sterling traders remain focused on factors outside the UK.

Though GBP/USD has risen 10% from its May 22 low at 1.2067 to its recent trend high at 1.3266, bulls and bears are caught in a tug-of-war between 1.3050 and 1.3260, the range between Aug 13 and today.

Recent broad USD weakness has helped keep the pound from falling too far, and GBP/USD buyers shrugged off weak UK retail sales data , and instead are focusing on German GDP and Ifo beats. Hence, the push back up into the 1.31’s.

With Bolli's and daily moving averages pointing higher, it would seem the advantage is with the bulls. However, EUR/USD, who has led other pairs higher, and the dollar lower, is losing momentum.

A look at IMM positioning hints at dramatically overbought EUR positioning. EUR specs are carrying 197k EUR contracts, while GBP specs are long 7k contracts and JPY specs +21k. A reversal in EUR positioning should prod GBP specs to resume selling.

A GBP/USD close below the August 14 low at 1.3048, puts Aug 4's low at 1.2982 and the 30-DMA by 1.2969 in sharper focus, with bears gaining momentum below 1.2813, the 50% Fibo of 1.2360-1.3266.

For more click on FXBUZ

GBP Chart: https://tmsnrt.rs/2CXR6AB

GBP-EUR IMM Chart: https://tmsnrt.rs/3lhAXYg

(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

((Paul.Spirgel@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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