Perhaps it is not surprising that ahead of the looming Brexit vote determining Great Britain’s fate as a member of the European Union that the iShares MSCI United Kingdom ETF’s (NYSEArca: EWU), the largest U.K. exchange traded fund listed in the U.S., is a favored target of short sellers.
Additionally, currency investors have been actively trading on sentiment ahead of the Brexit vote through the CurrencyShares British Pound Sterling Trust (NYSEArca: FXB). Retail investors are betting on a weaker pound by shorting the currency through FXB. The targeted currency ETF has been a popular play among retail investors who do not want to deal with the hassle of directly shorting currencies or using derivatives and leverage in complex foreign exchange trades.
The Brexit is widely seen as a negative market catalyst. For instance, in a note, Richard Turnill, BlackRock Global Chief Investment Strategist, argued that the vote would likely send shocks through global markets, pressuring riskier assets like stocks and corporate credit, in the ensuing risk-off environment as concerns over political instability.
Polls have showed mixed results, with online surveys revealing a much closer result while phone calls have suggested a lead for a remain. Sterling has acted as a barometer of sentiment in the run-up to the June 23 referendum, hitting a seven-year low against the U.S. dollar in February after the date of the vote was announced.[related_stories]