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How Did Large Speculators React to Last Week’s Events?

PART:
1 2 3 4 5 6 7
Part 6
How Did Large Speculators React to Last Week’s Events? PART 6 OF 7

How Did British Pound Speculators React to Brexit News?

British pound gained from positive Brexit news

The British pound (FXB) appreciated by 1.0% against the US dollar (UUP) in the week ending December 1. The pound (GBB) closed for the week at 1.4, a three-month peak, as positive developments were reported from the Brexit negotiation table. The issues surrounding the Brexit bill and the Irish border remain, and the EU negotiators are expected to close these discussions by December 4. Once these issues are sorted out, the negotiations could move to phase two, where future trade relations between the EU and UK will be discussed.

British equity markets (BWX), in line with their EU peers, depreciated last week with the FTSE 100 Index (EWU) posting a close of 7,300, down by 1.5%.

How Did British Pound Speculators React to Brexit News?

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Speculators turned bullish on British pound

As per the latest commitment of traders (or COT) report released on December 1 by the Chicago Futures Trading Commission (or CFTC), speculators have turned bullish on the British pound. The total outstanding net positions were 4,573 long contracts as compared to 300 short contracts in the week before. If the first phase of negotiations is declared to be successful, there could be a further build-up of long positions next week.

Week ahead for the British pound

Brexit negotiations will remain in focus, and the crucial issue of the Irish border is expected to be settled this week. British Prime Minister Theresa May is scheduled to meet with Jean-Claude Juncker, the president of the European Commission, this week, and any new developments from this meeting are likely to impact the British pound. Economic data releases from the UK this week include UK services PMI, industrial production, and trade data, but the key driver will likely continue to be Brexit negotiations.

In the next part of this series, we’ll look at the decline in the Japanese yen last week.

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