Finger still in the air, Goldman forecasting GBP edition

You’re a currency analyst. You have models. Your models give you comfort and a safe place from where you can play The Forex. They give you stability and a lens through which the world appears manageable.
Then Brexit happens.
From Goldman’s FX team as t…

You're a currency analyst. You have models. Your models give you comfort and a safe place from where you can play The Forex. They give you stability and a lens through which the world appears manageable.

Then Brexit happens.

From Goldman's FX team as they try to work out a fair value for sterling:

Continue reading: Finger still in the air, Goldman forecasting GBP edition

Beware randomly falling markets

Evergreen advice here from Citi:

Beware of unexpected outcomes to expected events.

But it’s the accompanying chart that’s worth the click:

Continue reading: Beware randomly falling markets

Evergreen advice here from Citi:

Beware of unexpected outcomes to expected events.

But it’s the accompanying chart that’s worth the click:

Continue reading: Beware randomly falling markets

The RMB and potential Brexit camouflage

Here’s A repeated theory: Brexit-shenanigans has caused GBP to go nuts. Crashes have flashed, journalists have frenzied, the FX and political worlds have been transfixed. And during this period, China has cynically decided to weaken its currency versus the US dollar while everyone was distracted.

As we said, it’s just A theory but here’s what an accompanying chart might look like, courtesy of CreditSights:

Screen Shot 2016-10-12 at 11.57.28

Continue reading: The RMB and potential Brexit camouflage

Here’s A repeated theory: Brexit-shenanigans has caused GBP to go nuts. Crashes have flashed, journalists have frenzied, the FX and political worlds have been transfixed. And during this period, China has cynically decided to weaken its currency versus the US dollar while everyone was distracted.

As we said, it’s just A theory but here’s what an accompanying chart might look like, courtesy of CreditSights:

Screen Shot 2016-10-12 at 11.57.28

Continue reading: The RMB and potential Brexit camouflage

Sorry, but the FX market can simply be gappy too

Remember the flash crash?

Well, it (as opposed to the overall Brexit-inspired fall in GBP) was very probably also a market structure thing.Continue reading: Sorry, but the FX market can simply be gappy too

Remember the flash crash?

Screen Shot 2016-10-09 at 10.35.18

Well, it (as opposed to the overall Brexit-inspired fall in GBP) was very probably also a market structure thing.

Continue reading: Sorry, but the FX market can simply be gappy too

Breakevens and the Great British Peso

While we’re waiting for everyone to flail through the ocean of FX crash causality, this is worth paying attention to….

5y5y forward UK inflation swap rate. Market inflation expectations in the process of being deanchored? pic.twitter.com/D5ZqiD29sW

— Toby Nangle (@toby_n) October 7, 2016

Continue reading: Breakevens and the Great British Peso

While we’re waiting for everyone to flail through the ocean of FX crash causality, this is worth paying attention to….

Continue reading: Breakevens and the Great British Peso

Parts of the City of London are in serious decline

Once every three years the Bank of England — working with the BIS — comes out with the results of a survey providing a snapshot of FX and rates trading volumes in London. The latest summary is out. Usually we just gawp a the size of the notional numb…

Once every three years the Bank of England -- working with the BIS -- comes out with the results of a survey providing a snapshot of FX and rates trading volumes in London. The latest summary is out. Usually we just gawp a the size of the notional numbers involved and maybe bask in the knowledge that, in this area at least, London comfortably outflanks New York. But not this time.

Continue reading: Parts of the City of London are in serious decline

Finger still in air, GBP forecasting edition

Right, with the warning that we are back in The Forex and nothing is certain, this from HSBC is an unpleasant paragraph for those long the Great British Krona*:

In our view, GBP is the main part of the adjustment mechanism but the adjustment is not over yet. We still see GBP-USD at 1.25 by end of Q3 and 1.20 by year-end. However, we now see GBP weakness extending into 2017 and we now forecast GBP-USD at 1.10 by end-2017. This aligns with our economist’s view that the Bank of England will ease even further, cutting rates by 15bp in November and expanding QE in February next year.

Continue reading: Finger still in air, GBP forecasting edition

Right, with the warning that we are back in The Forex and nothing is certain, this from HSBC is an unpleasant paragraph for those long the Great British Krona*:

In our view, GBP is the main part of the adjustment mechanism but the adjustment is not over yet. We still see GBP-USD at 1.25 by end of Q3 and 1.20 by year-end. However, we now see GBP weakness extending into 2017 and we now forecast GBP-USD at 1.10 by end-2017. This aligns with our economist’s view that the Bank of England will ease even further, cutting rates by 15bp in November and expanding QE in February next year.

Continue reading: Finger still in air, GBP forecasting edition