Forex Flash: Downside drivers for GBP limited in short-term – UBS

FXstreet.com (Barcelona) - The GBP had its best week since the beginning of February, led by GBP/USD purchases coming from hedge funds. In addition, the EUR/GBP on the other hand was flat. “Barring ongoing negative data surprises, it appears that downside drivers for sterling may be limited in the short-term and entrenched shorts (such as hedge funds in the GBP/USD) are being lifted.” warns Gareth Berry, a Research Analyst at UBS.

Moreover, structural woes in the Eurozone are also helping sterling's case. The franc was net sold on the week as the USD/CHF and EUR/CHF buyers both returned, but not in meaningful size. “Crucially, asset managers were on the other end of market flow in both pairs and continued adding CHF longs.” Berry adds.