Shorting the British pound is no longer a trendy bet after Prime Minister Boris Johnson reached a Brexit pact with the European Union.
According to CFTC commitment of traders data, the net position of traders on the pound is very nearly flat.
Deutsche Bank however says there are two risks for sterling. One comes Thursday, when the Bank of England meets on interest rates. “A cut to the base rate is unlikely, but with the market pricing only a couple of basis points worth of cuts before year end, the risks are tilted to the dovish side,” says Oliver Harvey, Deutsche’s macro strategist.
Another is the U.K. general election, with polls showing the Conservatives with a sizeable lead. “We would be concerned that if polls begin to narrow, the market might begin to fret about the unappealing prospect of another hung parliament, as was the case a little over two years ago,” he says.
The British pound GBPUSD, +0.0233% on Thursday edged lower to $1.2878, from $1.2883.
The FTSE 100 UKX, +0.08% declined 0.06% to 7383.75.