Investors are taking big long positions in the British pound, and that has trading implications.

The old saying that the sun never sets on the British empire must be on investors' minds these days. Long positions in the British pound against the Japanese yen have been building - and that has trading implications.

Some 77% of traders are long the pound against the yen, up from 72% on Wednesday. And while that may sound like good news for the pound, it's not.

Think about short squeezes and it starts to make sense. When a lot of investors are short a currency, any snippet of good news can turn things around. This is just a case of vice versa: any disappointments from Britain could lead investors to bail. For that matter, so could currency-boosting news out of Japan.

The Bank of Japan just left interest rates unchanged, and the short yen-pound positions still increased. But if it remains on the sidelines - or if conditions in Britain worsen - that could all change.

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