GBP was one of the most shorted instruments on the Capital.com trading platform during the quarter
LONDON, UK / ACCESSWIRE / October 11, 2022 / According to the Q3 2022 Pulse report published by global trading and investing platform Capital.com, the currency markets saw some of the highest levels of trading activity among its retail traders in the third quarter, with trading volumes in the GBP/USD reporting some of the biggest spikes following the UK government's mini-budget announcement.
According to the findings of the Pulse report, trading volumes in GBP/USD across the platform amounted to more than $11bn in Q3, 144% higher than Q2. The number of people trading GBP/USD also increased by 23% in Q3 vs Q2, with UK and Middle East traders accounting for the largest volume of trades in the popular currency pair.
Daniela Hathorn, Market Analyst at Capital.com, said the significant pick-up in trading volumes in GBP/USD was likely driven by increased volatility and a stronger USD.
"In August alone, the pound fell by more than 7% against the US dollar. Meanwhile, record-high natural gas prices, central bank divergence and further political uncertainty added to the pound's volatility. All of these events conspired against the pound, leading traders and investors to massively trade and subsequently short the currency against a rising US dollar."
Based on the data released in the Pulse report, the pound was one of the most-shorted instruments on the Capital.com platform between July and September. The share of short-position trades in the British pound increased from 38% in Q4 2021 to 46% in Q3 with a significant rise in bearish sentiment immediately following the appointment of the new UK government.
Big spikes in the number of traders going short GBP occurred on 6 September-the day Liz Truss was named the new Prime Minister. Short positions in GBP/USD were up to 44% on 6 September, compared with 37% on the previous day.
The findings also show that trading volumes in GBP/USD reached record highs following the UK's ‘mini-budget' announcement with a further 549% increase since 6 September.
"The initial reaction to the UK mini-budget was brutal, with GBP/USD seeing the biggest daily drop since the Brexit referendum back in 2016 and pushing the UK currency into the top spot as the worst performing G10 currency so far this year. While the government's recent U-turn and central bank intervention has helped turn the tide for the British pound, we believe risk premiums on UK assets are likely to remain elevated a little longer. Low consumer confidence and the belief that the Bank of England joined the hiking party a little too late will continue to add further downside pressure on the British Pound," added Hathorn.
The findings were revealed in Capital.com's quarterly report-Pulse- which tracks the trading patterns of retail investors across all markets it operates in. Over 6 million people have opened an account on the Capital.com platform.
For additional trading data and retail investment trends, you can view the complete Pulse report here.
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Notes to Editors
Capital.com is a high-growth investment trading group of companies empowering people to participate in financial markets through secure, innovative platforms that take the complexity out of investing. Its intuitive award-winning platform, available on web and app, offers investors a seamless trading experience to over 6,000 world-renowned markets. To help investors trade with confidence, the platform is enabled with robust risk management controls and transparent pricing while its all-in-one Investmate app delivers extensive financial lessons and educational content to support clients in their investment journey.
Capital.com has a global network with offices located in the UK, Gibraltar, Singapore, Australia, and Cyprus. In 2021, the platform reported a 350 per cent growth in its client base, making it one of Europe's fastest growing investment trading platforms with more than 4 million registered users.
Capital Com (UK) Limited is authorised and regulated by the Financial Conduct Authority (FCA) under registration number 793714. Capital Com SV Investments Limited is Authorised and regulated by the Cyprus Securities and Exchange Commission (CySEC), under license number 319/17. Capital Com Australia Pty Ltd is authorised and regulated by the Australian Securities and Investments Commission (ASIC) under AFSL Number 513393.
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