ORLANDO, Fla., Nov 22 (Reuters) - Amid all the confusion over the Bank of England"s botched guidance on when it will start raising interest rates, one clear pattern has emerged: Hedge funds are dumping sterling. Funds are the most bearish on the pound since June last year, according to the latest positioning data from Chicago futures markets, marking a historic U-turn since the BoE"s surprise decision earlier this month to keep rates on hold. Commodity Futures Trading Commission data shows that hedge funds and speculators increased their net short sterling position to 31,599 contracts in the week to Nov. 16 from 12,093 the week before. That"s essentially a $2.65 billion bet on the pound falling. Just two weeks before, funds were net long more than 15,000 contracts, a collective $1.3 billion bet on the currency rising. Only twice since the sterling futures contract was launched in 1988 have there been bigger two-week selloffs, in March and December of 2007. The catalyst this time was the Bank"s rate-setting committee"s 7-2 vote on Nov. 4 to keep interest rates at a record low 0.10%, despite strong hints from Governor Andrew Bailey and Chief Economist Huw Pill that an inflation-fighting hike was a real possibility. More confusingly for traders who had followed this guidance and went long sterling, Bailey and Pill were not the two dissenters calling for a rate increase. Both have since gone on a mini public relations offensive to clear up the mess. On Friday, Pill said the weight of evidence was shifting towards a rise in rates next month but that he had not made a decision. Bailey told The Sunday Times that risks to inflation are two-sided although he worries that it could be "elevated for longer". read more Upbeat UK labor market data last week also and helped lift the pound from a one-year low of $1.3350 back above a key chart area around $1.34. Sterling could be at a turning point. As the CFTC data show, funds are heavily short. But that positioning is only up to Nov. 16, and probably does not take into account the pound"s bounce back last week. There is also a full calendar month until the BoE"s next policy meeting, plenty of time for funds to build back longer. This is more than plausible. Annual inflation is running above target at 4.2% and may be reaching 5% next year, while signs of entrenched labor market strength are emerging. Rates market pricing is firmly pointing to only the second December rate hike in almost half a century. On the other hand, 100 basis points of tightening is fully priced in over the next year. That"s pretty aggressive, and is roughly double the Fed"s expected tightening path over the same period. Will the Bank of England really tighten policy that much? Noting fears that the Bank could be making a policy mistake, analysts at Rabobank are cautious about how far rates can be raised without endangering the economic recovery. "A December rate hike is only likely to lead to sustainable gains for the pound if it is backed by further strong UK data releases," they wrote in a note last week.