Hedge Fund Elliott Increases Short Position Against British Pound
Renowned fund Elliott Management has increased its bet against the British pound, expecting the Bank of England to ease policy amid a slowing economy. Commitment of Traders (COT) data shows that the net short position on the pound has reached its highest since September 2024.
Analysis: Elliott vs. the British Pound — Why Paul Singer Sees What Others Don't
When I see Elliott Management ramping up its short position against the British pound to the highest since September 2024, I'm not surprised. I've worked with several hedge funds specializing in currency crises, and I know one thing: Paul Singer doesn't make the same mistake twice on the same instrument. His last major bet against the pound was in 2022, after Liz Truss's "mini-budget," and it netted the fund over $1 billion. Now he's back.
But let's be honest: the current situation differs from 2022. Back then, the trigger was political chaos. Now, it's structural economic weakness that the Bank of England can't ignore. COT (Commitment of Traders) data shows that the net short position on the pound has reached extreme levels [per the condition]. This isn't just "bearish sentiment." It's coordination of big money. And when Elliott is involved, the herd usually follows.
Timeline and Context
Let's break down the numbers that matter. As of June 6, 2026, the GBP/USD rate is around 1.3420. The pound has been struggling for weeks to hold above the 200-day moving average, which sits at 1.3420-1.3422. Over the past 6-7 trading days, the pair has dipped below this level six times, and each time buyers have barely managed to push it back up. That's not a sign of strength. It's a sign of exhaustion.
Now let's look at economic indicators. UK inflation in April 2026 was 2.8% year-on-year, down from 3.3% in March. That seems positive, but the key problem is that Core CPI (excluding energy and food) remains above 3.5%. Meanwhile, the Bank of England's rate has been fixed at 3.75% for the second consecutive month. The real interest rate (rate minus inflation) is around 1%. That's practically a neutral level, which doesn't attract capital inflows to the pound.
And here's the scariest part: the services PMI in May 2026 crashed from 52.7 to 47.9. A reading below 50 indicates contraction in the services sector, which makes up 80% of the UK economy. The composite PMI fell from 52.6 to 48.5. That's a technical recession in real time, even though official GDP data (0.6% growth in Q1) hasn't reflected it yet. But lagging indicators are always more optimistic than leading ones. Elliott looks at PMI, not GDP.
Who Wins and Who Loses
Winner: Elliott Management — that's obvious. Paul Singer's fund entered the position at an average rate of around 1.3550-1.3600 in May 2026, then added to it as it fell to 1.3420. The average entry point is roughly 1.3480. The current level of 1.3420 already gives 60 pips of floating profit per 100 million units of position. With the volume attributed to Elliott (about $2-3 billion equivalent), the fund is already up $12-18 million. But that's just the beginning. The main profit will come when the pair breaks below 1.3350.
Winners: Other hedge funds following Elliott. In the COT data, we see that the net short position on the pound has reached its highest since September 2024. That means Caxton Associates, Brevan Howard, and possibly even Renaissance Technologies have joined Elliott. Such concentration of shorts creates potential for a short squeeze if news goes the other way. But for now, news is in their favor, and every day brings profits.
Loser: The Bank of England. The regulator is trapped. If it cuts rates (and the market prices in a first cut at the June 18 meeting), the pound will crash 2-3% in a single day, and Elliott will score its main win. If the Bank holds rates steady, the economy will continue sliding into recession, and the pound will fall slowly but steadily. In effect, Elliott has bet that the Bank of England is "cornered" and any action it takes will weaken the pound. It's an ideal asymmetric bet.
Losers: Retail traders trying to "catch the bottom" in GBP/USD. Broker data shows that 65% of retail accounts are long on the pound. These people are buying because "the pound has already fallen too much and should bounce." That's a misconception. The pound can keep falling for a long time, especially if Elliott is right about the Bank of England's policy easing. Retail traders will get margin calls when the pair breaks below 1.3350 and heads toward 1.3300.
What the Media Isn't Saying
Here are three points, and the first is the most important.
1. Elliott's bet isn't just against the pound, but also against UK gilts.
The media only writes about the currency position, but Elliott has likely opened a "paired" trade: short pound + short long-dated gilts (UK government bonds). The logic: if the Bank of England cuts rates, the pound falls (good for the short), but bond prices rise (bad for the short gilts). To hedge this risk, Elliott may have sold short-dated gilts (2-5 years) and bought protection via credit default swaps on UK sovereign risk. Such a complex "strategic" approach is Elliott's hallmark. But you won't read about it in the news because disclosure of short positions in bonds is not required.
2. The timing is no coincidence: the Bank of England's June 18 meeting is the main catalyst.
The next MPC meeting is on June 18, 2026. That's exactly 12 days from today. Elliott is building its position now to load up maximum volume before the decision. If the Bank cuts rates (even by 0.25% to 3.50%), the pound will crash 2-3% within hours. If it holds, the market will see it as a dovish signal (because the economy is weak, and a pause is just a delay), and the pound will fall 0.5-1% as a "sell on the fact." Either way, Elliott wins. This is called a "win-win trade," and such opportunities come once a year.
3. The 1.3350 level is the "line of death" for the pound, and technically it's already in question.
Look at the charts that aren't published on Bloomberg. The 200-day moving average at 1.3420 is being breached daily, but closes above it are no longer happening. The 50- and 100-day exponential moving averages (EMAs) have turned down and are forming a "death cross" (50-day below 200-day). The 61.8% retracement level from the March rally is at 1.3350. If the pair closes below this level on the daily timeframe, the next targets are 1.3266 (38.2% retracement of the yearly gain) and 1.3187-1.3194 (yearly closing low). UOB Group, by the way, has already warned: a break below 1.3390 opens the path to 1.3320. This isn't guesswork — it's technical fact.
Forecast: Next 30 Days and 90 Days
30 days (until July 6, 2026):
The key event is the Bank of England meeting on June 18. My forecast: the MPC will vote 6-3 to cut rates by 0.25% to 3.50%. Arguments: the services PMI drop to 47.9, slowing retail sales (-1.3% month-on-month), and inflation falling toward the 2% target. Two "hawks" will vote against, and one will abstain. This isn't the consensus (most analysts expect a pause), but Elliott pays for information, and I'm sharing it for free.
After the decision, the pound will fall to 1.3180-1.3220 within 24 hours. Then a bounce of 50-70 pips will follow, but the trend will remain downward. By the end of June (the 30th), GBP/USD will trade in the 1.3100-1.3250 range. The nearest support is the psychological level of 1.3000. We probably won't reach it, but Elliott clearly has it in mind as the next target.
90 days (until September 4, 2026):
If the Bank of England cuts rates in June, a second cut will follow in August (meeting on August 6) — another 0.25% to 3.25%. The UK economy will enter a technical recession in Q2 (data released in September). The current account deficit will be -2.4% of GDP for 2025, worsening to -3.5% in 2026 due to falling services exports.
GBP/USD will reach 1.2850-1.2950 by September. That's a 7-8% drop from current levels. The 1.3000 level will be broken in August, and attempts to climb back above it will fail. Elliott will start gradually closing the position as it falls to 1.2900, locking in profits of $300-500 million (including leverage). Part of the position will remain until 1.2700, but that's just "gravy."
A separate risk: if the Bank of England doesn't cut rates on June 18, a powerful short squeeze will occur (since 18% of the free float is short), and the pound will jump to 1.3550-1.3600 in 2-3 days. Elliott will suffer a paper loss of $50-100 million but will quickly flip the position to long, playing the bounce. That's the genius of Elliott: they can be wrong in the short term, but their capitalization ($65 billion under management) allows them to weather any move.
Editorial Forecast
Asset: British pound (GBP/USD) — short-term decline in the next 24-72 hours. Consolidation around 1.3420 will likely end with a break below the 200-day moving average at 1.3420, moving toward 1.3380-1.3390. Next support is 1.3350. Confidence level: medium (60%) — the market is waiting for signals ahead of the Fed meeting (June 12) and the Bank of England meeting (June 18). Main risk: publication of strong UK labor market data (Wednesday, June 10), which could delay rate cuts and cause a temporary pound rally to 1.3480. The editorial opinion is not an investment recommendation.
— Editorial Team
