GBP Shorts Ease Slightly But Bearish Bias Remains

• UK CFTC GBP speculative net positions declined to -13.9K in the latest release, compared to -16.2K in the previous report according to the latest data.
• This suggests reduced bearish pressure on the British pound, which may signal a potential stabilizing trend in GBP sentiment.
• However, the figure remains in negative territory, indicating that short positions still dominate the speculative stance.

Sterling's speculative positioning has moved slightly toward less bearish territory in recent reporting, according to the Commitments of Traders (COT) report published by the Commodity Futures Trading Commission (CFTC) on 04:30 ET. The latest net speculative position for GBP came in at -13.9K, an improvement from the prior reading of -16.2K. While this tightening reflects a reduction in bearish pressure, the net position remains negative, suggesting that speculators continue to favor short positions over long ones.

The CFTC GBP net position is a key indicator for foreign exchange traders and macro investors because it reflects the aggregate positioning of large speculators, including hedge funds and other institutional players, in the GBP futures market. A persistently negative position may be interpreted as a contrarian signal—suggesting that the pound could potentially rebound if the positioning reaches extreme levels. This week's data shows a slight shift toward less bearish positioning, but whether this is the start of a broader trend remains to be seen.

In the current macroeconomic climate, the GBP is at a critical juncture ahead of the Bank of England's upcoming policy decision. Market attention is focused on the Monetary Policy Committee (MPC) vote split, as investors gauge the BoE's stance on inflation and growth. A narrowing of speculative short positions could suggest reduced conviction in the pound's downward trajectory, but it must be weighed against broader macroeconomic fundamentals and central bank policy.

Sterling's performance is also influenced by the GBP/USD and EUR/GBP pair dynamics. The GBP/USD pair is currently under pressure, while EUR/GBP is showing signs of a potential reversal. These cross-currency moves are often driven by broader risk appetite and relative interest rate differentials. As the CFTC data indicates, the speculative stance on GBP is evolving, but without a clear directional shift in policy or economic conditions, the pound may remain in a range-bound or volatile phase.

Looking ahead, investors and traders should monitor the BoE's next decision for clues on the direction of monetary policy. Additionally, the weekly COT report will remain a valuable barometer of speculative positioning. A further narrowing of the GBP net short position—or, conversely, a return to more extreme bearish levels—could provide further insight into market sentiment. In a low-conviction environment, even small shifts in positioning could have outsized impacts on GBP volatility.

Beyond the COT data, broader macroeconomic indicators such as U.K. GDP, inflation, and employment figures will continue to shape the GBP's trajectory. For now, the CFTC report offers a snapshot of current speculative activity and may serve as a signal for near-term liquidity flows and positioning shifts in the GBP futures market.