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Commenting on the latest CFTC Commitment of Traders (COT) report, Rabobank analysts noted that the net short GBP positions continued to rise amid the escalating political tensions in the UK.

Key quotes

“The subsequent resignation of PM May and the support for the Brexit party in the European parliamentary elections has meant that candidates for May’s replacement have hardened their Brexit positions. This leaves GBP vulnerable.”

“USD longs edged higher but have remained essentially consolidative since the middle of March.   Having dropped lower in the November/December period in response to a more dovish outlook for the Fed, USD longs then consolidated for a lengthy period. Another leg lower occurred in mid-March.”

“Short EUR positions climbed ahead of the European Parliamentary elections, reverting back to the recent trend. Shorts have been extending since the start of the year reflecting the loss of confidence in the outlook for the Eurozone economy and expectations for a more dovish ECB.”