Speculators Continue to Predict British Pound Sterling Will Decline
The British Pound Sterling remains tipped to decline by speculative traders.
The bearish stance towards the British currency comes despite steady gains since July; GBP/USD and GBP/EUR are this morning still flirting with 4 month highs.
GBP/USD is currently quoted at 1.5935 and GBP/EUR is at 1.1935.
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Data from the major US futures & options exchanges (CFTC) are released each Friday evening and report positions
up to the close of business on the previous Tuesday. Traders are classified as either commercial or non-commercial. The positioning of the non-commercial traders can be used as a proxy for the speculative side of the market.
Speculators continue to predict British Pound declines
Lloyds Bank Research, in their assessment of the latest CFTC data, say the are surprised by the stance taken against the UK currency:
"It remains surprising that as of last Tuesday net CME positions remained significantly short GBP despite GBP/USD having risen steadily since early July.
"The break above June highs which occurred last Wednesday may well have triggered a squaring of some long held short positions, and the latest surge in response to the Summers news over the weekend may reflect some further unwinding. Still, it may well take a break above 1.60 before positioning is properly square.
Data from the major US futures & options exchanges (CFTC) are released each Friday evening and report positions
up to the close of business on the previous Tuesday. Traders are classified as either commercial or non-commercial. The positioning of the non-commercial traders can be used as a proxy for the speculative side of the market.
US Dollar positioning
USD positioning changes were very mixed in the week to September 10, but increases in net long USD positions against the EUR and JPY ensured that agg regate long USD positions rose, even though net long USD positions against GBP, AUD and CAD were reduced.
Euro positioning
"Net long EUR positioning was almost cut in half in the latest week and is down to very modest levels. While positioning may have increased a little since the data was collected last Tuesday, there is little reason to expect a major move in EUR/USD on the basis of positioning. The market is broadly neutral as long as we stay in the 1.31-1.34 range," say Lloyds Bank.
Elsewhere, the largest positions in the market continue to be short JPY and AUD, particularly short JPY, with
positioning now only just below the May high, while short AUD positions were cut back a little and have
probably been further reduced in recent days suggest Lloyds.
Back in May, USD/JPY reached a high of 103.74, but in the latest surge in positioning it has failed to breach even the July high of 101.53, which was reached with a slightly lower level of net JPY longs, suggesting some weakening in underlying demand for USD/JPY.
While the big short JPY position has been in place since USD/JPY rose above 85, and is consequently unlikely to be pressured in the short run, the failure to break above July highs in spite of the rise in positioning suggests potential to test the bottom end of the recent range in the 96 area.