GBP/USD at 1.6950 as Shine Comes Off

The shine is starting to come off the U.K. pound, which has given up its reign as the most popular bullish bet for 2014 among the Group of 10 currencies.

Hedge funds and other large speculators cut their net wagers on a sterling advance by 28,915 contracts in the three weeks ending July 25, the biggest reduction in a year, data from the Commodity Futures Trading Commission in Washington show. The currency slipped to $1.6944 yesterday in New York from an almost six-year high of $1.7192 July 15 amid speculation much of the good news on Britain’s economy is reflected in the exchange rate.

“There have been pullbacks in the past, but this time it may be different,” John Hardy, the head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark, said yesterday by phone. “At this level, sterling will need constant new inputs to justify its price. We may have seen the top in the pound-dollar exchange rate.”

Bloomberg

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