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Hedge funds have slashed their short bets on the British pound to the lowest level since the Brexit vote last June.

The cut to short bets, which would profit on a drop in the pound, followed Theresa May’s decision to call snap elections in June — a move that investors said would allow the ruling Conservative Party to consolidate power.

The pound has climbed more than 3 per cent against the US dollar and 5 per cent against the Japanese yen since the general election was called last week.

Leveraged funds, a proxy for hedge funds, reduced their short positions on the pound to 19,287 contracts in the week to April 25, according to data from the Commodity Futures Trading Commission released on Friday. That’s half the level a week prior and down 79 per cent from a November high.

Copyright The Financial Times Limited 2017. All rights reserved.

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