The latest CFTC positioning data as of 12 August 2025 reveals minimal changes in FX positioning from the previous week. The Euro remains the largest net long, surpassing the 80th percentile in the past 52 weeks based on net-positioning as a percentage of open interest.
The British Pound holds the position as the second largest net short, with rapid market shifts occurring over the last two weeks. This follows a less dovish stance from the Bank of England and recent jobs and retail sales data, potentially creating divergence opportunities between the Euro and Pound if EU Flash PMIs fall short and UK PMIs exceed expectations.
Australian Dollar Opportunities
Additionally, the Australian Dollar remains the largest net short. However, there are limited opportunities to exploit this due to a lack of Australian data in the upcoming week.
Based on positioning data from August 12th, 2025, we see the Euro as the market’s biggest long position. This trade is very crowded, sitting above the 80th percentile for the last year, which makes it vulnerable to a sharp reversal. Much of this confidence seems built on July’s Eurozone inflation which, at 3.1%, came in slightly hotter than expected and kept hopes of ECB hawkishness alive.
The British Pound, in contrast, is the second-largest net short, with sentiment turning negative very quickly in early August. This bearishness seems to ignore the solid data we saw last week, with July’s retail sales beating expectations at a 0.5% rise and unemployment surprisingly ticking down to 3.8%. The Bank of England also sounded less dovish than anticipated at its last meeting, setting up a potential squeeze on these short positions.
Trading Strategies Based on Divergence
This creates a clear divergence play between the Euro and the Pound for the coming weeks. We believe the best strategy is to watch the upcoming EU and UK Flash PMI releases for a catalyst. If the Eurozone numbers miss expectations and UK data shows continued resilience, the crowded EUR long and GBP short positions could unwind rapidly.
For derivative traders, this suggests positioning for a rise in GBP relative to the EUR, perhaps through EUR/GBP call options. This would allow for profiting from a potential upside move in the Pound against the Euro while clearly defining the risk involved. The key trigger will be that divergence in the upcoming economic data.
Meanwhile, the Australian dollar remains the largest net short in the market, largely driven by ongoing concerns about weak economic figures from China. However, with very little significant Australian data on the calendar this week, there is no clear trigger to act on this extreme positioning. We think it’s better to wait for a clearer signal before trying to fade this crowded trade.
