Talk of an extension of the March 29 Brexit deadline for the UK to leave the EU is strengthening GBPUSD.
It reached a high of 1.3095 early Thursday, its strongest level since November 8 last year, before easing back marginally, and could yet extend its gains.
GBPUSD hit its highest level Thursday since early November before easing back a tad. It now seems to be in a good place to extend its gains, having climbed above the psychologically important 1.30 level that may limit any losses.
Sterling's primary driver remains Brexit and it is benefiting from speculation that the so-called Article 50 deadline of March 29 for the UK to leave the EU could be extended.
Meanwhile, from a technical perspective, the next target will likely be the high at 1.3175 reached on November 7 last year. To the downside, trendline support lies at 1.2832 if 1.30 is breached.
In the meantime, retail trader sentiment data show 44.5% of GBPUSD traders are net-long, with the ratio of traders short to long at 1.25 to 1. The number of traders net-long is 6.4% lower than yesterday and 15.1% lower than last week, while the number of traders net-short is 17.4% higher than yesterday and 31.3% higher from last week.
At DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests the GBPUSD price may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBPUSD-bullish contrarian trading bias.