Bets against sterling hits record level

Speculators increased bets against sterling to record levels even after the formation of the new coalition Government, as worries escalated over the health of the UK finances.

Data from the Chicago Mercantile Exchange showed speculators had extended bets against sterling to 76,745 contracts from 72,188, equivalent to $6.9bn (£4.7bn), in the week ending on May 18, the Financial Times reports. While activity on the CME represents a fraction of the daily turnover on the world's currency markets, the paper says the data is widely regarded as a proxy for hedge fund activity. It was the fourth consecutive week speculators increased short positions in sterling, taking the ratio of short-to-long positions to nine-to-one.