GBP/USD: Citibank says flow analysis shows more buying of USD and selling of GBP to come

According to Citibank's flow analysis, buying of USD and selling of GBP should be considered by traders right now.

"The purchase of USD is the strongest signal this week. Hedge funds and investors in real money have reached an "overselling" level after several months of sales, and this interest is starting to wane. We note that this is the first time since late April/early May that the flow model has generated a buy signal on the USD.

This is the right time, when investors should accumulate purchases of USD due to the changed sentiment.

Sales of GBP in real money have started and we expect more in the coming months. Post-referendum, the majority of GBP sales were initiated by hedge funds (Leveraged). This week was the first of the last 9 where sales began in real money.

Investors still have a considerable amount of GBP to sell, suggesting that the currency should underperform the G10 in the coming weeks."