According to CFTC data for the week between 27 Nov-3 Dec, speculative investors have trimmed some GBP shorts with latest polls keep cementing the prospect of a (market-friendly) Conservative majority win ahead of the UK parliamentary election on Thursday, notes Francesco Pesole, FX strategist at ING.
Key Quotes
“Sterling net positions are currently at -13% of open interest, which is in line with its 5-year average and suggests that the upside potential for GBP stemming from more short squeezing should be fairly limited.”
“Elsewhere, CFTC data display a marginal increase in shorts amongst G10 low-yielders. EUR/USD net positioning retracted by 1% (of open interest), while the yen kept correcting lower, along with the other safe haven, CHF. This dynamic tends to endorse the idea that the euro is assuming more and more the character of a funding currency and is, therefore, unable to take full advantage of positive swings in risk sentiment.”
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