GBP now rich: take profit on longs vs EUR, CHF, SEK

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GBP now rich: take profit on longs vs EUR, CHF, SEK

James Nelligan AC Global Markets Strategy

(44-20) 3493-6829 21 July 2026 J P M O R G A N

james.nelligan@jpmorgan.com

rules in his first few speeches. We think it unlikely he veers from this over the coming month,

which should allow GBP to continue to trade well. The long runway to firm up fiscal policy

detail ahead of the budget should allow a positioning catch-up dynamic and carry friendly

environment to support GBP. In terms of other risks for GBP, such as from equity markets,

we think the currency should be resilient to that given that positioning is lighter compared to

other high beta currencies and a positioning catch-up dynamic is still taking place. Looking

at positioning vs carry across a broader currency spectrum suggests GBP positioning should

screen longer relative to its level of carry (Figure 2GBPcarysugestsapositioningcatch-updynamiccanstiltakeplaceafterpoliticalriskhelditback). Political uncertainty ahead of the

Makerfield by-election and due to the sheer number of potential political pathways ahead at

that time, meant sterling long positioning was held back relative to other high yield currencies

such as USD or AUD. Systematic inflows have been important for GBP and the currency still

ranks highly on our FX Macro Quant TEAMS model, which can continue to offer support.

Political uncertainty should matter more for GBP than the policy lean from specific

candidates, which suggests carry and positioning are key. Last week, GBP appeared to

benefit partly from the FT article (link) suggesting Mahmood could be named as Chancellor,

though M&A news may also have supported the currency. The supposedly least market

friendly candidate was Miliband, though when his odds improved earlier in July, GBP didn’t

respond.