Short Sellers Flock to big U.K. ETF Ahead of Brexit Vote

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.

Related: Brexit Sends Sterling ETF to All-Time Low

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.