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Feb 18
|
|
$1.36
$1.35
-0.7%
|
LONG
|
Jeremy Stretch
Editor, Financial Times
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The UK faces political risk (Reform UK challenging BoE mandate) and a dovish pivot. Conversely, Australia has tight monetary policy and a strong metals/commodities backdrop. Diverging central bank paths (BoE cutting, RBA holding/tight) plus a commodity boom favors the Aussie Dollar over the British Pound. LONG AUD / SHORT GBP. A collapse in global commodity demand (specifically China). |
Bloomberg Markets
Lagarde Reported to Leave ECB Before Term End...
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Feb 18
|
|
$1.36
$1.35
-0.7%
|
SHORT
|
@ReutersBiz
|
Falling British inflation strengthens the case for a Bank of England interest rate cut, which could weaken the GBP and boost UK equity markets. |
@ReutersBiz
British inflation fell to its lowest since Ma...
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Feb 17
|
|
$1.36
$1.35
-0.7%
|
SHORT
|
Vonnie Quinn
Anchor, Bloomberg
|
"Unemployment rate in the U.K. hitting the highest since the pandemic cementing the bet on two interest rate cuts... Sterling weakening." Weak labor data forces the Bank of England to cut rates aggressively (March/April). Lower rates relative to peers (or just the expectation of them) devalues the currency. SHORT Sterling (GBP) against the USD or Euro. Unexpectedly high UK inflation data forcing the BoE to hold rates. |
Bloomberg Markets
Stock Futures Slide; US, Iran Hold Talks in G...
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|
Feb 17
|
|
$1.36
$1.35
-0.7%
|
SHORT
|
Shonali Pinon
UK Economist, Bank of America
|
UK unemployment ticked up to 5.2% (vs 5.1% exp) and wage growth cooled to 4.2% (vs 4.6% exp). The "sticky inflation" narrative in the UK is breaking due to labor market weakness. This forces the Bank of England's hand. Markets moved to price an ~80% chance of a March cut. Lower yields = Higher Bond Prices (Gilts) and a weaker currency (Pound). LONG UK Government Bonds (Gilts) to capture the yield compression; SHORT Sterling as the yield differential narrows against the USD. Inflation data (CPI) tomorrow surprises to the upside, forcing the BoE to hold. |
Bloomberg Markets
Anthropic’s Pentagon Talks Snag, Pound Falls ...
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Feb 14
|
|
$1.36
$1.35
-0.7%
|
LONG
|
@business
|
Prime Minister Keir Starmer said Britain is no longer the country that voted for Brexit and vowed to build a closer relationship with the European Union https://t.co/SxQW2PpLo4 |
@business
Prime Minister Keir Starmer said Britain is n...
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Feb 05
|
|
$1.36
$1.35
-0.7%
|
LONG
|
Bob Elliott
Substack author, Nonconsensus
|
The BoE is expected to hold policy steady due to annoyingly elevated inflation and strong recent survey data, despite weakening labor markets. This cautious stance contrasts with the Fed's anticipated aggressive push for easier policy. The relative hawkishness/holding of the BoE compared to the dovish Fed creates an opportunity for GBP appreciation against the USD. Long GBP/USD to benefit from the BoE's cautious stance and the Fed's expected dovishness. UK inflation could fall faster than expected, prompting the BoE to cut rates more aggressively, or the Fed could pivot to a less dovish stance. |
Nonconsensus
Developed World Monetary Policy Divergence
|