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Mar 12 - 01:55 PM

GBP/USD - COMMENT-Crowded Positioning Is A Worry For Sterling

By Justin Mcqueen  —  Mar 12 - 12:55 PM

While the pound has outperformed relative to its G10 counterparts so far in 2024, positioning is becoming a concern for the currency.
The latest CFTC data shows that traders hold the largest bullish bet since August.
In turn, net longs are now two standard deviations above the historical mean, which typically marks a peak in the currency.

Data is starting to lean towards the dovish side, as highlighted by the latest UK jobs report, where wages missed expectations.
This follows the weaker KPMG/REC jobs survey data, which also shows that momentum in the labour market is slowing.
Although, the key focus for the Bank of England’s rate outlook is on inflation, particularly services inflation.

Given current positioning, risks lean asymmetrically towards a weaker sterling, should UK data continue to surprise on the downside.
What’s more, with a rate cut not fully priced until August, there is room for a dovish repricing.

On the technical front, GBP/USD remains capped at the 200-WMA (1.2857) as had been the case in December.
Therefore, unless we see a firm close above, bulls may be left exposed.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary

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