Francesco Pesole, the FX Strategist at ING, notes that the CFTC speculative positioning data reveals that GBP continues to show the recurring weekly volatility in its net-long positions, suggesting some reporting “technicalities” may be behind the weekly moves. 

"Since mid-March, sterling’s speculative positions have followed a recurring pattern: an increase of 3-4% of open interest in net-longs in a week and the opposite move in the week after. As a result, GBP has remained in the net-long territory within a range of 13-19% of o.i." 

"We saw another instance of this dynamic in the week ending 1 June as GBP net positions dropped by more than 4% of open interest. However, this “roller-coaster” ride in GBP positioning has not been matched by similar moves in the spot market. This divergence might suggest that weekly swings in positioning may be related more to reporting technicalities than actual changes in the market’s market sentiment on the currency."

"But GBP investors are now mainly looking at two main themes: the increasingly hawkish tone by Bank of England officials - with Gertjan Vieghle suggesting that a first-rate hike might come in 1H22 - and doubts about the planned easing of Covid-19 restriction in the UK on 21 June will go ahead."

"We continue to see further upside room for sterling in the coming weeks, even if the full reopening of the economy is postponed. The slightly overstretched net-long positioning should not be enough to curb further GBP gains, in our view."