Inflation pressures are likely to provoke further rate hikes by both the BoE and ECB in the coming months. But recession concerns for the Eurozone and the UK, have market participants questioning just how long the rate hike cycles will continue.
: Retail trader data shows 73.37% of traders are net-long with the ratio of traders long to short at 2.76 to 1. The number of traders net-long is 4.82% higher than yesterday and 9.17% higher from last week, while the number of traders net-short is 1.92% lower than yesterday and 23.65% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bearish contrarian trading bias.The ECB’s difficult balancing act of raising interest rates to combat multi-decade highs in price pressures while preventing fragmentation of sovereign bond markets has proven successful thus far. But growth concerns continue to mount, as Eurozone energy inventories remain depressed ahead of the winter months.
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