Shorting the Pound – What Does it Mean?
A trader who shorts the pound meaning, aka’selling the pound’, is betting that it will decrease in value against another currency, for example the dollar. They borrow pounds from a broker and sell them on the forex market, in the expectation that they will then be able to buy back the pounds at a lower price and pocket the difference as profit.
Traders can also short the pound using derivative products like spread bets and CFDs, as this avoids having to own the underlying asset. However, it is a more complex strategy and involves accepting the risk of losses as well as gains.
Hedge fund managers have been raking in the profits as the pound has continued to plummet. Edouard de Langlade, the founder of macro hedge fund EDL Capital, has retained a fifth of his wagers against the pound, cashing in as it dropped to near parity with the dollar.
Choosing the Right Forex Trading Platform in the UK: A Comprehensive Guide
The pound has been pushed to its lowest level since the Brexit referendum, as concerns about the UK leaving the EU without a deal grow. Meanwhile, Prime Minister Boris Johnson has warned rebel MPs who oppose a no-deal Brexit that he would call a general election if they blocked his Brexit plan.
The pound’s weakness is a result of a number of factors, including uncertainty about Britain’s future in the European Union, concerns that the Bank of England will raise interest rates, and speculation that the US Federal Reserve will increase its own interest rates in September. It has also been hit by a slew of economic data, including disappointing figures from the construction sector.