Speculators ramped up their bets against sterling in the latest week by the most in nearly five years, as hedge funds and other asset managers struck a decidedly defensive stance in the British currency two weeks ahead of a crucial referendum over whether the country should remain in the European Union. Sterling net short positions more than doubled to 66,299 contracts, valued at nearly $6 billion, in the week ended June 7 from 32,851 the previous week, according to data from the Commodity Futures Trading Commission released on Friday.
It was the largest net short position in sterling in three years, and the weekly increase was the largest since September 2011. Speculators have been persistently net short sterling for about six months. Until the latest reading, however, net short positioning had fallen substantially from the previous three-year high hit back in April. With market participants growing increasingly focused on what is seen as a toss-up result, open interest in CME sterling futures has been building. In the latest week, it rose by more than 15,000 contracts to a three-month high of 259,238 valued at more than $23 billion.
Sterling on Friday fell to a two-month low in the wake of the latest poll on the EU referendum, and so far this year, the British pound was down 3.2 percent. Britons will vote on June 23 on whether to leave the EU, a decision with far-reaching implications for politics, the economy and trade in Europe.
According to a poll by ORB for The Independent newspaper published on Friday, the "Leave" camp was 10 points ahead of "Remain". It was the biggest lead enjoyed by those wanting Britain to quit the 28-member bloc since the poll series started a year ago, The Independent said. Net long dollar positioning, meanwhile rose for a third straight week, with net longs rising to their highest in four months despite last week's US non-farm payrolls report for May that came way below market expectations.
The value of the dollar's net long position rose to $11.30 billion in the week ended June 7, from $4.86 billion the previous week. Position changes were most significant among the reserve currencies, with notable deteriorations in already bearish sentiment toward the euro and the British pound.
Swiss franc net positioning has turned bearish from neutral. The yen, meanwhile, is the largest held net long while the euro and sterling were the largest held net shorts. The Reuters calculation for the aggregate US dollar position is derived from net positions of International Monetary Market speculators in the yen, euro, sterling, Swiss franc and Canadian and Australian dollars.