Francesco Pesole, FX strategist at ING, notes that speculative investors curtailed their net short exposure to sterling, bringing the net short positioning below 10% of open interest for the first time since May, according to CFTC data covering the 4-10 December.
Key Quotes
“It is key to highlight that the move (+4% of o.i.) in positioning does not embed the election results, so expect the positioning indicator to advance further towards the neutral area in the next CFTC report.”
“These sort of dynamics likely spell the end of the sterling short-positioning “advantage” that has exacerbated the upside movements in the currency a number of times in the past few months. This does not mean, however, that a neutral positioning may in any way curb more upside in GBP; we continue to see the balance of risks for EUR/GBP tilted to the downside in the remainder of the year, even after the post-election move.”
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