GBP futures: further weakness on the cards?

CME Group’s preliminary data for Wednesday show open interest in the GBP futures market dropping by nearly 11.5K contracts to 258158 contracts, from Tuesday’s final figures at 269593 contracts.

Potential deeper pullbacks

The decrease in open interest in the current context of GBP weakness is seen as a bearish signal, pointing to liquidation of long positions after the recent rejection on tops beyond the 1.2800 handle, probably following the disappointing UK labour market data and the Fed’s rate hike.

That said, the area of recent lows around 1.2630 emerges as a significant interim support. In addition, this area is reinforced by the proximity of the 100-day sma, today at 1.2626. If open interest attempts to stabilize, that could mean the liquidation is somewhat mitigated and GBP could be ready for another bullish attempt.