Investors are lining up bets that the pound will fall further after a tough start to 2022 as a “dire” mix of towering inflation and slowing growth darkens the UK’s economic outlook.
Wagers that sterling will fall are near their highest level in almost three years, according to Commodity Futures Trading Commission data, which track how speculative investors are positioned in futures contracts, a proxy for sentiment in the $6.6tn-a-day foreign currency market.
Even as Boris Johnson survived a parliamentary confidence vote this week — potentially averting a period of political turmoil — markets are focused on the gloomy economic backdrop, say analysts, meaning the UK prime minister’s victory is unlikely to prompt a change in course for the currency.