Down nearly 16% year-to-date, the CurrencyShares British Pound Sterling Trust (NYSEArca: FXB), which tracks the British pound’s movement against the U.S. dollar, is already one of this year’s worst-performing currency exchange traded funds.
Unfortunately for sterling bulls and FXB, the currency’s slide has been hastened throughout this year by a variety of macro factor, giving supporters few reasons to initiate new long positions. That ominous trend seems to be continuing.
SEE MORE: Pound ETF Retreats as Sterling Slips Toward 31-Year Low
Currency markets were already on edge with the British government setting a timeline for a break from the European Union in what some see as a potential “hard Brexit.” Discounting the Friday flash crash, the pound has depreciated around 6% against the U.S. dollar since Monday and is on course for its worst weekly performance since the Brexit vote.
However, when examining pound-related exchange traded products trading outside the U.S., there are signs that some traders are betting that the pound is poised to rebound. Recent data suggest inflationary pressures in the U.K. could prove problematic for sterling.
“Bank of England Governor Mark Carney testified before the Parliamentary Treasury Committee on Tuesday as well. The Governor suggested that the lower October numbers should not be taken as a sign of decreasing inflationary pressure. He noted that prices paid by factories for raw materials increased substantially in October,” according to Options Express.
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