A1 Trading Company

February 19, 2024

Trading GBP Into PMI

Frank Cabibi

Pound pairs are now a stronger bullish reading on the EdgeFinder than any other currency this week. With PMI data coming in the UK on Thursday, here is what to expect for the GBP pairs in the coming days.

EdgeFinder Analysis

GBPAUD is the strongest of the GBP pairs today at +7. The score increased by 1 point as the trend reading may be turning around from a bearish to bullish move on the 1D timeframe. The majority of retail is short this pair.

Meanwhile, smart money is getting heavily long GBP this week as they increased their net long position by 6.4%. This was the highest percent change to the long side for the week. Investors will want to see a higher PMI number this Thursday to help fuel GBP strength.

Higher global PMI could impact the price of oil in a bullish way. It is now one of the strongest bullish readings on the EdgeFinder at +7. After oil's 10% retracement from the $78s, it appears that the commodity's retest might suggest a breakout higher.

Oil also caught another round of buying from smart money in Friday's report. Retail positioning is split down the middle which means it is continuing to fall while COT net long sentiment is increasing.

GBP is arguably more bullish than the dollar is now. Seeing the drastic change in COT sentiment this week is something to consider as institutions may be betting on a higher PMI number this Thursday.

The trend reading is also the only category that changed similarly to the GBPAUD pair. USD will also be reporting PMI on Thursday. The likelihood of higher numbers for US seem more probable than a lower number. This is due to the fact that US inflation was higher than expected. And it seems that COT is betting on a higher PMI number in the UK as well.

Retail Spotlight

Retail sentiment is mixed GBP and oil. The strongest short positions are still CHF with a few NZD pairs. It would be a clearer bullish sign for the pound if we started to see a shift in retail sentiment to the

Smart Money Spotlight

The strongest changes we saw this week from COT filings are on the GBP, gold and JP225. While smart money has sold a considerable amount of gold last week, they are moving more money into the pound. This is a strong suggestion that the big players are betting on a stronger currency in the UK ahead of PMI numbers this week.

Fundamental Spotlight

PMI numbers in the UK have been creeping higher each month and are likely to continue for both the manufacturing and services sector. Right now, there is not much data on PMI for GBP yet on the EdgeFinder. However, expectations of a higher percentage on Thursday indicate another slight tick higher.

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