GBP flows: GBP weaker as risks increase

GBP under a little pressure this morning, with the USD also making general gains as equities slip lower after overnight gains.  GBP is vulnerable partly because of the risk involved in the BoE MPC meeting on Thursday, which is priced as representing around a 60% chance of a rate cut. On top of that, the latest CFTC positioning data shows net long speculative GBP positions hitting another new record, and EUR/GBP is starting from a place that looks low relative to the historic correlation with yield spreads. There is therefore significant risk involved in holding long GBP positions at this point, and some paring back of these positions makes sense.