Pound Slides on Brexit Trigger Date as Hedge Funds Boost Shorts

• Pound Slides on Brexit Trigger Date

The pound fell against all but one of its 31 major peers after British Prime Minister Theresa May said she’ll begin the U.K.’s process of withdrawal from the European Union in the first quarter of 2017 and as hedge funds raised bets that the currency will weaken.

Sterling was about 1 percent from the 31-year low set in the days following the nation’s shock decision in a June 23 referendum to leave the EU. A gauge of the dollar advanced as traders sought the safest assets after May hinted she’s leaning toward a so-called hard Brexit, and before U.S. payrolls data due later this week that will help determine the Federal Reserve’s next policy move.

“We’re back to the Brexit risks,” said Vishnu Varathan, a senior economist at Mizuho Bank Ltd. in Singapore. “Sterling has taken a bit of a knock first. If the concerns become wider concerns about financial market contagion, we will find that the slight softening that we’ve seen in the dollar trend will be shaken off.”

The pound fell 0.3 percent to $1.2938 as of 6:46 a.m. in London, after reaching $1.2902, its weakest level since Aug. 16. It reached $1.2798 on July 6, the lowest since 1985. The Bloomberg British Pound Index, which measures the U.K. currency against major peers, has lost about 14 percent since the referendum.

Short positions, or bets on sterling’s decline, outnumbered bullish wagers by 87,714 contracts last week, according to U.S. Commodity Futures Trading Commission data. That’s the first time that large speculators had raised bearish bets on the currency since the week ended Aug. 23, when net wagers for a weaker pound reached a record 94,978 contracts.

The Bloomberg Dollar Spot Index, which tracks the currency against a group of major peers, was up 0.1 percent after declining 0.4 percent in September.

New Zealand’s dollar slid 0.4 percent to 72.56 U.S. cents before Tuesday’s GlobalDairyTrade auction. The average price for whole milk powder fell for the first time since July at the previous auction on Sept. 20.

“The New Zealand dollar was down probably on nervousness about the GDT auction tomorrow, following the disappointment the last time,” said Imre Speizer, a market strategist at Westpac Banking Corp. in Wellington.