Rabobank: Sterling’s Upside to be Limited on Fears that Monetary Tightening will Increase Recession Risk

Speculators’ net long positions in sterling are now at their highest level since July 2014, Rabobank said.
Long positions look a bit excessive for a currency like sterling that is still suffering from weak economic fundamentals.
In the second half of June, the pound fell against both the dollar and the euro, suggesting that investors were reluctant to remain long on the pound.
While the Bank of England is widely expected to continue raising interest rates in the month ahead, the bank believes that the pound’s upside will be limited by concerns that tightening monetary policy will also increase recession risks.
As has been proven several times over the last year, rate hikes by the Bank of England do not always boost the pound.