Hedge Funds Ramp Up Bearish Pound Bets on Andy Burnham Risk

Hedge funds and asset managers piled into bearish sterling option bets last week after Manchester Mayor Andy Burnham secured a pathway to potentially challenge for UK prime minister, raising fears of political instability and looser fiscal policy.

The volume of sterling put options against the dollar, which rise in value if the pound weakens, was more than six times larger than for calls, according to data from the Depository Trust & Clearing Corp. on contracts worth at least £100 million across May 14 and 15. Sterling put options against the dollar notched their highest volumes in two years on Thursday on CME Group’s central limit order book.