Traders have been betting against the pound as speculation over Keir Starmer’s future has mounted this week, data from brokerage IG shows.
They report that short-selling activity against the pound surged sharply over the past week.
IG explains:
Short positioning in GBP/USD saw notional trading volume jump 45% week-on-week on IG’s platform, alongside a 19% rise in the number of clients taking bearish positions and a 16% increase in trade count.
The pound emerged as the single biggest focus for bearish positioning, with traders increasingly using sterling exposure to hedge or speculate on further UK volatility.
This morning, the pound is trading flat against the US dollar at $1.352, having hit a two-week low yesterday.
Chris Beauchamp, chief market analyst at IG, says traders are “increasingly reaching for the ‘sell’ button on UK assets, expressing concern about where the UK economy could be heading next.
Beauchamp adds:
“There’s also been a notable jump in short positions across major UK banks, which often act as a barometer for confidence in the domestic economy. While volumes in those names are nowhere near those of sterling, the speed of the increase shows nerves are beginning to spread more broadly across UK markets.
While political uncertainty has started to weigh more heavily on UK assets, investors still appear to view Starmer as the more market-friendly option compared with the prospect of another prolonged period of political instability or policy volatility reminiscent of the chaos seen between 2022 and 2024.”
