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Spectrum Markets: European Retail Investors Lean Bearish On British Pound In March

Date 11/04/2024

  • Spectrum's SERIX sentiment index for Euro against British Pound reached 117 points
  • Meanwhile SERIX sentiment for the Pound against Japanese Yen hit 95 and remained close to neutral against US Dollar
  • SERIX data reflects retail investor sentiment following recent Bank of England rates decisions

 

Spectrum Markets (“Spectrum”), the pan-European trading venue for financial instruments, has published its SERIX sentiment data for European retail investors for March, revealing generally bearish trading behaviour towards the British Pound when compared to benchmark currencies such as the Euro and Japanese Yen in particular.

Spectrum saw the sentiment for Euro against the Pound reach 117 points, a high not seen since October 2021. Meanwhile, SERIX sentiment for the Pound against the Japanese Yen hit 95 and remained close to neutral against the US Dollar at 101, indicating a cautious stance among European retail investors towards the British currency.

The SERIX value indicates retail investor sentiment, with a number above 100 marking bullish sentiment, and a number below 100 indicating bearish sentiment. (See below for more information on the methodology).

Market opinion

“The current lack of positive sentiment towards the Pound can be attributed to a combination of factors, including persistently high inflation, which is falling slightly but not yet enough for the Bank of England to cut interest rates”, says Michael Hall, Head of Distribution at Spectrum Markets.

“Meanwhile, the UK’s central bankers are once again somewhat more united in their monetary policy stance. Eight of the nine monetary policymakers were in favour of stable interest rates, with only one central banker voting in favour of an immediate interest rate cut. At the previous meeting, two members had spoken out in favour of raising interest rates, while one voted in favour of easing. The inconsistent voting behaviour had caused confusion about the future direction.”, adds Michael Hall.

Spectrum’s March data

In March 2024, order book turnover on Spectrum was €213.2 million, with 35.3% of trades taking place outside of traditional hours (i.e., between 17:30 and 9:00 CET).

72% of the order book turnover was on indices, 2.9% on currency pairs, 10.7% on commodities, 6.4% on equities and 8% on cryptocurrencies, with the top three traded underlying markets being DAX 40 (23.5%), NASDAQ 100 (21.8%), and DOW 30 (12.3%).

Looking at the SERIX data for the top three underlying markets, the DAX 40 sentiment increased slightly from 93 to 95. Similarly, the NASDAQ 100 increased slightly from 96 to a neutral 100 and the DOW 30 remained at a bearish 99.

Spectrum_11Apr24

Calculating SERIX data

The Spectrum European Retail Investor Index (SERIX), uses the trading venue’s pan-European trading data to shed light on investor sentiment towards current development in financial markets.

The index is calculated on a monthly basis by analysing retail investor trades placed and subtracting the proportion of bearish trades from the proportion of bullish trades, to give a single figure (rebased at 100) that indicates the strength and direction of sentiment:

SERIX = (% bullish trades - % bearish trades) + 100

 Trades where long instruments are bought and trades where short instruments are sold are both considered bullish trades, while trades where long instruments are sold and trades where short instruments are bought are considered bearish trades. Trades that are matched by retail clients are disregarded. (For a detailed methodology and examples, please visit this link).