GBP futures: consolidation likely near term

According to CME Group’s preliminary figures for open interest and volume in GBP futures markets for Tuesday, traders continued to scale back their positions. This time contracts decreased by more than 2.2K vs. Monday’s final 203,215 contracts. Volume, however, recovered from Monday’s significant drop and rose by around 4K contracts.

Buy the dips in GBP/USD

Cable has been losing ground for the third session in a row so far today, including a test of peaks above 1.3100 the figure in all of the last three sessions. However, open interest has been contracting following Friday’s strong increase against the backdrop of rising volume on Tuesday. The up move seems to hint at some exhaustion, although sellers remain so far unable to break below the psychological support at 1.3000 for the time being. Some consolidation between 1.30/1.31 thus appears likely, at least in the near term. Risks to this view come from the Brexit side, as this will be the main driver for spot in the medium to longer term.