UK CFTC data shows GBP non-commercial net positions increased to -£52K from -£54.7K.
The move indicates a smaller net short position in sterling compared with the previous report.
Sterling Positioning Turns Less Negative
We are seeing a slight reduction in net short positions on the British Pound, moving from -£54.7K to -£52K. This suggests some of the most pessimistic traders are closing their bets against sterling. However, the overall market sentiment remains clearly bearish, not bullish.
This cautious shift likely reflects recent data showing UK inflation for March 2026 cooled to 2.8%, moving closer to the Bank of England’s target. While preliminary Q1 GDP growth was a sluggish 0.2%, it did avert a recession, removing a key tail risk for now. This mixed but slightly improved picture is prompting a re-evaluation of the most extreme short GBP positions.
The key question remains the timing of the Bank of England’s first rate cut, which markets are now pricing for the third quarter. Recent meeting minutes showed a growing dovish sentiment within the committee, with more members favouring a cut. This contrasts with the US Federal Reserve, which continues to signal a “higher for longer” stance, capping any significant rally in GBP/USD.
We remember the significant sterling volatility throughout 2025 following the new government’s first budget, and traders are still wary of being caught short. Given the reduced pessimism but lack of a clear bullish catalyst, selling out-of-the-money options to collect premium could be a prudent strategy. This approach capitalizes on the idea that sterling may trade within a range while we await a definitive policy move from the Bank.
