Sterling is trading higher against most its major peers this morning as the currency’s recent rise looks to persist. Besides the sharp rally seen on the day that PM May called a snap election, this has been a fairly slow and measured move higher in the pound as it has steadily appreciated and printed a series of higher highs and higher lows.
A look at the latest positioning data on the pound reveals that the level of short positioning in the market remains at elevated levels which means that there is the potential for further fuel to be added to the current rally. The rise seen in recent weeks has seen net positioning move off its lows, but this is in fact due to an increase in the number of longs rather than a reduction in shorts.
Despite several major banks abandoning their short calls on the pound, it seems that money managers are stubbornly holding on and the next sharp move in the currency could well be triggered by these deciding to throw in the towel.
UK stocks enjoy bright start
The leading UK stock market has begun the day in a bullish mood with the FTSE 100 adding 30 points. Mining stocks are leading this latest push higher with Glencore (LON:GLEN) the best performing share and rising by almost 3% so far. Fellow miners Antofagasta PLC (LON:ANTO), Anglo American (LON:AAL) and Fresnillo (LON:FRES) are all firmly in the green, with the gains all the more impressive considering the strength in sterling.
At the other end of the index is Micro Focus International (LON:MCRO), which is enduring a morning to forget as the stock of the software company has plummeted by over 8%. Last year the firm announced that it is buying most of Hewlett Packard’s software assets and today’s drop in the share price can be attributed to a statement that expressed disappointment with declining revenue at the HPE business it is acquiring. Preliminary estimates show HPE’s software revenue was down by around 10% in the first quarter (ended April 30th), largely due to a decline in licensing and professional services. The latest decline should be put in context however, with the firm having risen by more than 70% in the previous 12 months. Therefore long-term investors are still sitting on notable gains, however the latest news may be seen as a cause for concern and could lead to some profit taking in the coming sessions.
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