GBP/USD fell to a six-month low of 1.2055 as dollar funding pressures fueled demand for the U.S. currency.
The funding pressures have filtered into FX forward swap rates, where the swap market currently trades at a premium over depo rates, making long GBP positions -- short dollar -- more expensive to carry DEPO.
The increased funding cost and falling GBP/USD spot price is likely to have significantly reduced GBP/USD spec long positioning 1096742NLNG, which as of last Tuesday, March 10, stood at 26,328 contracts -- when GBP/USD was 8 big figures above current levels.
The GBP/USD gross spec long was +56k.
Those GBP longs had only recently put in a 21-month high at +76k and likely were unwound, en masse, amid recent spot weakness.
The likely reversal of gross long sterling positioning highlights the weakened position of bulls.
GBP/USD bulls need to recapture the lower 30-day Bolli at 1.2378 and still won't gain momentum until cable rises above the 200-DMA at 1.2702.
A daily close below 1.2082 would put the Sept. 3 low at 1.1959 in focus, setting the stage for a protracted bear run to October 2016 lows by 1.1490, 2016's flash crash low.