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Feb 18 - 11:55 AM

GBP/USD - COMMENT-Sterling Bulls Reaping Benefits Of EUR Spec Position Unwinds

By Paul Spirgel  —  Feb 18 - 10:18 AM

Sterling rose to a fresh 34-month high at 1.3986 and was eyeing a run at big-figure resistance by 1.40.

Cable received an added boost from selling in EUR/GBP, which plumbed an 11-month low at 0.8642, and the cross could be the source of further broad gains in the pound.

UK and U.S.
interest rates have been moving higher at a faster clip than EU rates, which explains some of the lag the EUR has had relative to the pound.

Over the past three months EUR/USD has risen 1.89%, while GBP/USD has rallied 5.23%.
GBP IMM net spec positioning over the same period has risen from -19.7k to +21.19k contracts.
While EUR net spec positioning has risen a scant 2k, the short component has risen from 69.1k to 80.7k, as specs sell into euro strength.
With COVID-related growth and haven concerns less prevalent, IMM specs may further unwind long positions in highly liquid EUR and yen, diversifying USD short positions.

GBP/USD was largely avoided owing to last year's Brexit concerns, so now it stands to rise further as specs rebalance USD short positions.
For more click on FXBUZ


EUR-GBP IMM Chart: Click here

GBP Chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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