eToro Traders Profit On Sterling Hype

(eToro Blog) The morning opened with a bang! We are, of course, talking about the bang from the land of the Union Jack aka the United Kingdom. The GDP data released today was surprisingly strong with figures showing growth at 1% in the third quarter, substantially higher than economists had expected and putting an abrupt end to the streaky recession that the economy had been mired in. In the FX arena, Sterling traders embraced the strong figures and reaction was not too late to come. The Pound Sterling, which had been bleeding since the end of September, encountered crowded buys and rose above 1.61 thus flipping to green territory and swinging into bullish trajectory.

The surprise growth came after an extended period of sluggishness and with the U.K. Parliament embroiled in a heated debate on how to solve the crisis. With the fierce criticism on budget cuts on the one hand and the Bank of England contemplating further easing on the other, it seemed as if the U.K. economy was in complete gridlock. As a result of this gridlock, growth expectations were lowered and investors – expecting the U.K. to be enveloped in a cloud of uncertainty – began shifting to dollar positions, pushing Sterling down below the 1.6 threshold. However, as the data streamed through the newswires this morning, investors began to realize that the picture for the U.K. is, indeed, brighter than previously thought. The growth outlook improved and appetite for Sterling resumed.

Sterling Rebound was On eTorians Radar

For a long time now, the talk in the eToro hallways has been about the remarkable accuracy of eToro Sterling Traders. Although many pairs are traded well within the eToro community it seems that Sterling traders are consistently able to outperform, predicting as a crowd, many rises and falls of the GBP/USD.

Sterling traders did not break out of their habit and had turned bearish in September; in fact, they have been bearish for 4 weeks in a row, banking on the Sterling fall from 1.63 to 1.6. However, to our surprise, since last week we noticed a change – suddenly eTorians turned bullish on the Cable, even with no evident signs for their optimism. Yesterday, ahead of the GDP data release in the U.K., we decided to examine again eTorians’ position, just to see what the smart money thought of the upcoming U.K. GDP figures. Not only did Sterling traders remain bullish but they have become even more so.

I remember closing my laptop before the day’s end last night and pondering whether eTorians would get this right once again. The answer was clear; I woke up to see a Strong Sterling rise. So will the Pound Sterling rise further? The smart money says yes!

Copyright 2012 eToro Blog