Non-Commercials increased their net long positions in the Euro last week buying a further 5k contracts to take the total position to 79k contracts. The single currency has now been net-bought for eight consecutive weeks, reflecting an acute shift in sentiment on behalf of institutional investors. Consistently strong data, growing hawkish ECB expectations and diminished political risk have all contributed stronger demand for the currency.
Focus this week will be on the second round of the French elections with centrist candidate Macron widely expected to gain the Presidency. Other key events/releases include the EU summit on Thursday as well as flash eurozone PMIs on Friday.
GBPUSD
Non-commercials increased their net short positions in Sterling last week selling a further 3k contracts to take the total position to -40k contracts. Sterling has now been net-sold for three consecutive weeks, reflecting the growing uncertainty around the political leadership in the UK as well as the upcoming Brexit negotiations. Though GBP is likely to remain supported in the near term, the risks of the UK failing to achieve a deal with the EU, have grown considerably
At their recent monetary policy meeting, the Bank of England were seen to have taken a more hawkish shift with three members dissenting and voting for a hike. The latest inflation data showed CPI had jumped to its highest level since 2013 though wage growth remains subdued.
Read more: https://www.orbex.com/blog/2017/06/fx-cot-update-eur-net-bought-for-eighth-consecutive-week/