Traders are continuing to take bearish positions on the pound, with 57% of trading volume going short last week, according to data from investing and trading platform IG.
With a Labour leadership contest now underway, IG will publish a weekly Sterling Sentiment Tracker measuring how traders are positioning around UK political developments and sterling direction.
Bearish positioning against the pound has remained elevated for several weeks, peaking two weeks ago when 70% of GBP/USD trading volumes were short.
The political uncertainty is also driving a surge in sterling trading activity more broadly, with total GBP/USD volumes – both long and short – up almost 80% last week compared with the recent average.
On an individual client basis, sterling sentiment is evenly split, with traders going long and short at 50/50 over the last week.
IG Sterling Sentiment Tracker
| Metric | % long last week (Mon-Sun) | % short last week (Mon-Sun) |
| Total sterling trading volume | 43% | 57% |
| Individual clients placing sterling trades | 50% | 50% |
| Individual sterling trades | 39% | 61% |
Data on all UK clients trading GBP/USD from 11.05.2026-17.05.2026
Traders are also leaning more bullish on UK equities, with 58% of FTSE 100 trading volume last week long and 59% of clients holding long positions. Historically, the FTSE 100 has often benefited during periods of sterling weakness, as many listed companies earn significant revenues overseas, though this relationship is not always consistent.
Speaking on the data, Chris Beauchamp, Chief Market Analyst at IG, said: “Now that the Labour leadership contest is underway, traders are leaning bearish on the pound as uncertainty over the UK’s political and economic direction intensifies. Markets are clearly concerned that whoever ends up in Number 10 in the coming months could be governing from a weakened position, or may be seen as less committed to fiscal discipline than their predecessor.
“That uncertainty is showing up very clearly in sterling positioning. The pound is often the market’s first pressure point when confidence in the UK outlook starts to deteriorate, and the scale of short activity suggests traders are using it as the clearest way to hedge against further political instability.
“By contrast, sentiment towards the FTSE 100 appears more resilient. Many of the index’s largest companies generate significant revenues overseas, meaning a weaker pound can actually provide some support to international earnings.”
