I’ve detected unusual bullish volume in the PowerShares CcyShrs British PoundStlgTr (FXB) ETF.
The average three month daily volume is 38.29K shares traded a day. The volume today was 161K or 400% greater than the average daily volume.
The chart of FXB looks incredible.
Why are large players buying FXB down here?
The British Pound Sterling just got too cheap relative to the US dollar. At the start of 2018, the Bank of England looked set to hike rates multiple times in 2018 however, a series of soft economic data out of the UK put rate hikes on hold. The first quarter GDP in the UK came in at a tepid 0.1 percent quarter on quarter which was below the 0.4 estimate.
The soft data showed a slowdown in retail, an pick-up in electricity and gas, and a contraction in construction. Goldman Sachs analysts pointed out that this mirrors the weakness associated with unseasonably cold weather, supporting the premise that the weak print was more of a one-off that it was a structural slowdown. UK PMI numbers have already started to show a moderate rebound.
The sell off in the British Pound Sterling may be overdone. At least that’s what a lot of large players are betting.
I’m not adding the British Pound Sterling to any GuerillaStockTrading portfolios as it’s a very risky bet. Nevertheless, I did want to make you aware of the beautiful technical setup on FXB.
Disclosure: I do not any position in FXB.