CIBC Research discusses the latest positioning readings for GBP and EUR and sees a scope for building EUR longs over the coming months.
"A couple of months ago we noticed that net short positions held against ﬁve major currencies were in the tightest range they had been in for a number of years. Since then, trends in positioning have diverged, with potential implications for our FX forecasts," CIBC notes.
"Interestingly, sterling short positions have been pared back already, suggesting that our forecast for GBPUSD to move higher as Brexit uncertainty fades could be a little too bullish.
In contrast, the heavy short positions against the euro support our view that the euro could appreciate markedly when (or if for the pessimists out there) economic data start to improve," CIBC adds.