Sterling rose towards $1.30 again on Monday, with figures showing that speculators have cut bearish bets on the currency by the most in more than a year and the third most on record. The overwhelmingly negative view on the pound dominating foreign exchange markets since the Brexit referendum in June last year has abated since British prime minister Theresa May called a snap general election a month ago.
Many sterling “bears”, including big currency trading banks like Deutsche Bank and Bank of America Merrill Lynch, ditched their ultra-gloomy forecasts and the data shows many playing the Chicago futures markets have done the same. “Capitulation is the driver. Bears are giving up,” said Kit Juckes, head of FX strategy at Societe Generale in London.
Sterling was up 0.3 percent against the dollar in early trade in Monday to $1.2925, and the euro was down 0.2 percent at 84.60 pence.
Data late on Friday showed that International Money Market accounts on the Chicago Mercantile Exchange slashed their net short sterling position to 46,798 contracts in the week to Tuesday. That effectively means bets on sterling falling are the smallest since July last year.
The change of 34,566 contracts from the previous week was the third biggest position move in favour of the pound since IMM records began in the mid 1990s.