| LONDON, April 24
LONDON, April 24 A surge in buying of Britain's
pound last week put only a small dent in record net market bets
against the currency and sentiment remains finely balanced,
official data and capital flow reports from major banks showed
The internal indicators run by the currency world's single
biggest dealer, U.S. bank Citi, showed both big long-term fund
investors and the more speculative and short-term hedge fund
community bought the pound in the week to last Friday.
That was fuelled by a surge in sterling following Tuesday's
surprise calling of early parliamentary elections for June 8,
and matched analysis last week from another major player,
Deutsche Bank, covering the bulk of the day's flows.
Sterling rose by almost 4 cents trough to peak around the
announcement, racking up its second biggest daily gain against
the dollar since the 2008 financial crisis.
But opinions on the day varied as to how much of the record
high number of bets against the pound had been washed out in the
move, which some traders said had come among fairly moderate
flows of capital.
Data from the Commodity Futures Trading Commission issued
late on Friday showed that investors had cut only 6,000
contracts off the net "short" on the pound -- from 106,000
contracts to 99,500 contracts -- in the week to close of
business on Tuesday.
That also only came as a result of investors opening net
"long" bets on the pound, with the number of shorts in the
market actually rising on the week. There were also significant
caveats in the Citi numbers.
"Hedge funds became a sterling buyer and their weekly buying
was the strongest in six weeks," Citi's European head of FX
strategy Richard Cochinos said in the weekly report sent to the
bank's clients at the start of U.S. business on Monday.
"20 day positioning for leveraged investors however remains
The Citi numbers rated one-week flows and momentum among
hedge funds as favouring the pound, but still showed it as a
"sell" over the past four weeks. Real money was a buy on a
four-week basis but leaned against the pound in the previous
Its overall indications of net flows on the pound, also
taking in corporate orders, was negative for the week.
Deutsche's Corax measurement of market positioning showed 12
percent net buying by leveraged players and asset managers, one
of the heaviest position changes of the past year.
A third bank to report on the subject on Monday, Credit
Agricole, concurred that sterling had been bought strongly after
the announcement but also stressed the risks ahead.
"With speculative short positioning less elevated, we
anticipate limited upside risks from the current levels,"
analysts from the French bank said on Monday.
"This is especially true as overall uncertainty with respect
to actual Brexit negotiations should continue."
(Editing by Catherine Evans)