How to short the pound who short the pound are betting that it will decrease in value relative to another currency, such as the US Dollar. The process of shorting is often more complex than simply buying and selling assets on global financial markets, known as Forex, and requires knowledge and careful analysis.

Speculative investors are often behind the trend of shorting currencies. Hedge funds, for example, have a keen eye for the potential impact of economic indicators and political events on currencies, and are adept at shorting to profit from these changes.

For instance, it’s believed that Nigel Farage and many of his colleagues at a London currency trading company had information that the Leave side in the EU referendum would win the vote – and used this to their advantage by shorting the Pound before the referendum. The pound then fell to its lowest levels since 1992 as the cost of living crisis deepened and inflation accelerated, prompting further short bets by hedge funds.

Shorting the Pound: A Guide to Betting Against the British Currency

The best way to short a currency is through a CFD or spread bet provider that offers access to Forex markets (like Trading 212). These products allow you to trade on the price of a currency pair without actually owning it. If you think the GBP/USD pair will drop in value, you can short it by selling a CFD and then buy back at a lower price to make a profit.

However, remember that CFDs and spread bets come with leverage, so if you are wrong about your prediction the potential losses could exceed your initial deposit. Learn more about the risks involved here.