Shorting volume on pound jumps 45% on IG platform as traders react to Starmer leadership threat

Short-selling activity against the pound surged sharply over the past week as traders reacted to mounting political and economic uncertainty in the UK, according to new data from trading and investing platform, IG.

Short positioning in GBP/USD saw notional trading volume jump 45% week-on-week on IG’s platform, alongside a 19% rise in the number of clients taking bearish positions and a 16% increase in trade count.

The pound emerged as the single biggest focus for bearish positioning, with traders increasingly using sterling exposure to hedge or speculate on further UK volatility. A weaker pound could quickly feed through into higher costs for British consumers, particularly for overseas holidays, imported goods and energy bills, while broader market instability can also increase pressure on mortgage rates and borrowing costs.

Overview of key shorting activity

*Data collected from IG clients, for period 28.04.2026-11.05.2026

At the same time, bearish positioning on the FTSE 100 accelerated sharply, with the number of clients taking short positions rising 21% week-on-week, trade count increasing 29%, and overall shorting volume climbing 39% as traders positioned for further downside in UK equities.

Shorting activity on UK banks also jumped sharply over the past week, with short-selling volumes across the four main UK high street banks (Barclays, HSBC, Lloyds,and NatWest) more than tripling week-on-week. 

Chris Beauchamp, Chief Market Analyst at IG, comments: “Traders are increasingly reaching for the ‘sell’ button on UK assets. The scale of activity in GBP/USD and the FTSE 100 suggests this is far more than routine market noise – traders are using the pound and Britain’s flagship index as the clearest expressions of concern about where the UK economy could be heading next.

There’s also been a notable jump in short positions across major UK banks, which often act as a barometer for confidence in the domestic economy. While volumes in those names are nowhere near those of sterling, the speed of the increase shows nerves are beginning to spread more broadly across UK markets.

While political uncertainty has started to weigh more heavily on UK assets, investors still appear to view Starmer as the more market-friendly option compared with the prospect of another prolonged period of political instability or policy volatility reminiscent of the chaos seen between 2022 and 2024.”