Synopsis:

Credit Agricole assesses the positioning of the British Pound (GBP) within the G10 FX, highlighting that it remains the largest long despite a significant unwind driven by broad risk-off sentiment.

Key Points:

1. GBP Positioning:

   • Largest Long: The GBP continues to be the largest long position in the G10 FX market.
   • Fresh Selling: Recent selling interest, particularly last week, has been driven by broad risk-off sentiment.

2. Drivers of Selling Interest:

   • CACIB Flows: Selling has been predominantly driven by Crédit Agricole CIB flows, indicating active trading and repositioning by various market participants.
   • Investor Types: The selling interest has come from banks, corporates, hedge funds, and real money investors, reflecting a broad-based reduction in GBP exposure.

3. Overbought Territory:

   • Current Positioning: Despite the recent selling, the GBP is no longer in overbought territory. This suggests that the market's long positioning has moderated significantly.

Conclusion:

Credit Agricole notes that while the GBP remains the largest long position in the G10 FX space, it has experienced substantial selling interest amid a broad risk-off environment. This has led to a reduction in its overbought status, indicating a more balanced positioning among market participants.