As far as wild swings in FX markets goes, the last few days is up there with the most memorable of them. For the British Pound, such was to be expected; implied volatility measures had been pricing daily moves in excess of +/-3% at one point last week. Certainly, after the gap open higher in GBP/USD and the rest of the GBP-complex, there's something to be said about market participants and their sharp swing in sentiment since Thursday.

Look no further than recent UK-EU referendum polls and developments in betting markets as to why the British Pound, and risk assets generally (Crude Oil and global equities to wit), are rallying so sharply at the start of the week. The latest poll showed 'remain' with a 3-point lead over 'leave,' and odds on betting markets, as examined by aggregator Oddschecker, have all but evaporated. Last week, Oddschecker showed an implied 44% chance of a 'leave' vote; today, the probability of a 'leave' slipped below 30%.

Considering that we know private polls have been commissioned, such a move in FX markets the past few days suggests that there is an extreme level of confidence growing in a 'remain' vote on Thursday, June 23. Markets are rather vulnerable right now for a big move, as positioning in the futures market (per the CFTC's recent COT report) is stretched across many currencies.

British Pound net-short positioning in the futures market among speculators fell to -36.7K contracts in the week ended June 14, 2016, from -66.3K contracts in the week prior - a significant short covering move (this doesn't even take into account the FOMC meeting on Wednesday or the developments at the end of the week that spurred the turnaround in risk sentiment).

Likewise, both Euro and Japanese Yen speculative positioning is of significant interest given the swing in market sentiment. See the video (above) for a deeper discussion about positioning and technical considerations in EUR/USD, GBP/USD, USD/JPY, AUD/USD, GBP/JPY, EUR/JPY, and the USDOLLAR Index.