![]() Implied one-month sterling/dollar volatility rose above 11 percent on Monday for the first time in nearly two years, and euro/sterling one-month implied vol hit its highest in a year at 8.7 pct. ![]() It's currently hovering just above $1.28, so if funds intensify their attack on the pound, that $1.22 low could soon come back into view.Ĭurrency traders may already be bracing for that lurch lower. In September, the pound was as high as $1.33 in March last year it was as low as $1.22. As recently as late September it was nudging 80,000 contracts, while in March last year it reached a record 107,844 contracts worth $8.4 billion. ![]() There's certainly room for specs to expand their net short position. And if the UK political backdrop deteriorates further, don't be surprised if sterling tests and then breaks below the $1.2650 low that has been in place since April last year. The bearish turn comes against a renewed wave of negative domestic Brexit headlines for the pound: more government resignations, a cabinet divided more than ever, and growing signs parliament won't back Theresa May's proposed compromise with the EU.įunds and speculators had gradually scaled back their net short CFTC sterling position for most of last month to $3.8 billion from $6.5 billion in mid-September, which was the largest bet against the pound since May last year.īut that came to an abrupt halt in the last two weeks.
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