The best-performing major overall in 2024 is the GBP having seen significant upside on the USD and of course in many crosses but speculators are heavily long we have a bullish extreme and expect a trend reversal to the downside.

The three pairs we will look at in this article are GBP/USD, GBP/CAD, and GBP/CHF which we have covered in recent articles – we have been looking for a downturn and now think it will unfold.

GBP Speculative Positioning at an Extreme

The strength in the GBP has been based around the market pushing back against a rate cut in August and only seeing two cuts this year – as we have discussed in previous articles this outlook is unlikely to get better and speculators have a record net long position which warns of a downturn:

GBP/USD Forecast

“GBP net long positions increased for the third consecutive week, in dramatic fashion, driven by an increase in long positions. GBP longs are at record levels at 0.183M contracts. GBP has retained its position as the best performing G10 currency year-to-date following the UK July 4 election.” (RABOBANK) It has performed well but speculative positioning points to a downturn which we can see on the chart below.

The data above is from the COT Net Traders Positions and we will look for speculative positions against commercials who tend to be right at major trend reversals – When speculators are positioned heavily long or short and  commercials oppose them we will look for a potential trend change. Technical levels to look out for in GBP/USD are below.

Crosses GBP is at an Overbought Extreme...

We know we have a bullish extreme in the GBP in terms of speculative longs and in terms of the crosses, we want to look at traders to be positioned heavily short other majors with commercials heavily long - by looking at the positioning in the majors v the USD we can work out crosses where the GBP is a bullish extreme and two low-risk high-profit potential setups are below.

GBP/CAD Forecast

In terms of the GBP it's moved up on the CAD on the view the next Bank of Canada meeting could see a cut in interest rates and also the CAD is heavily correlated with the USD and recent USD weakness has weighed on the CAD.

In terms of speculative positioning, we know from GBP/USD that speculators are heavily long the USD – In terms of the CAD they are heavily short while commercials are heavily long which makes the cross a bullish extreme. Technical levels to look out for in GBP/CAD are below.

GBP/CHF Forecast

The CHF is a low-yielding currency offering just 1.25% as a yield which is the worst outside of the JPY while the GBP offers 5.25% which has seen a large amount of traders sell the CHF and buy the GBP. Speculators are heavily short of the CHF while commercials are heavily long. Technical levels to look out for in GBP/CHF are below.