Hedge Funds Ramp Up Bearish Sterling 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.

Volumes of sterling put options against the dollar, which rise in value if the pound weakens, were more than six times larger than call options on contracts worth at least £100 million across May 14 and 15, according to Depository Trust & Clearing Corp. data. Meanwhile, sterling put-option volume against the dollar on Thursday reached its highest since April 8, 2024 on CME Group’s central limit order book.