Skip to content
The DonkeyThe Donkey
  • Home
  • Account Payable
  • Account Number
  • Account Recovery
  • Account Riot
  • -
  • -
Account Recovery

Column: Funds abandon sterling at fastest pace since 2007: McGeever

Posted on November 22, 2021April 12, 2022 by Amy A. Stuart
22
Nov


ORLANDO, Fla., Nov. 22 (Reuters) – Amid all the confusion over the Bank of England’s botched forecast of when it will start raising interest rates, a clear pattern has emerged: hedge funds are abandoning the pound sterling.

Funds are the most bearish on the pound since June of last year, according to the latest positioning data from Chicago futures markets, marking a historic turnaround since the BoE’s surprise decision earlier this month to keep rates unchanged .

Data from the Commodity Futures Trading Commission shows that hedge funds and speculators increased their net short position in pounds sterling to 31,599 contracts in the week of November 16, from 12,093 the week before.

Register now for FREE and unlimited access to reuters.com

Register now

It’s basically a $ 2.65 billion bet on the pound’s fall. Just two weeks earlier, funds were net for more than 15,000 contracts, a collective bet of $ 1.3 billion on the currency’s rise.

Only twice since the launch of the pound sterling futures contract in 1988 have there been massive two-week sales, in March and December 2007.

CFTC

The catalyst this time was the 7-2 vote by the Bank’s rate-setting committee on November 4 to keep interest rates at an all-time high of 0.10%, despite strong indications from Governor Andrew Bailey and chief economist Huw Pill that a hike in the fight against inflation was a real possibility.

More confusing for traders who had followed this direction and gone long on the pound sterling, Bailey and Pill were not the two dissenters calling for a rate hike. The two have since launched a mini PR offensive to clear up the mess.

Pill said on Friday the weight of evidence was shifting towards a rate hike next month, but he had not made a decision. Bailey told The Sunday Times the risks to inflation are bilateral, although he fears it may be “high for longer”. Read more

Bullish UK labor market data last week also helped push the pound up from a one-year low to $ 1.3350 above a key chart area around $ 1.34.

CFTC

POLICY ERROR?

Sterling could be at a crossroads.

As the CFTC data shows, the funds are very short. But this positioning is only valid until November 16 and probably does not take into account the rebound of the pound last week. There is also a full calendar month left until the next BoE policy meeting, enough time for funds to replenish for longer.

This is more than plausible.

Annual inflation exceeds the target at 4.2% and could reach 5% next year, as signs of a strong labor market emerge. Market rate prices strongly point to only December’s second rate hike in nearly half a century.

On the other hand, 100 basis points of tightening are fully factored in over the next year. It’s pretty aggressive, and it’s about double the Fed’s expected tightening path over the same period.

Is the Bank of England really going to tighten its policy to this point? Noting fears that the Bank may make a policy error, Rabobank analysts are cautious about the extent to which rates can be raised without jeopardizing the economic recovery.

“A rate hike in December is only likely to lead to lasting gains for the pound if it is supported by further releases of strong UK data,” they wrote in a note last week.

Register now for FREE and unlimited access to reuters.com

Register now

By Jamie McGeever; Editing by Hugh Lawson

Our Standards: Thomson Reuters Trust Principles.

Related posts:

  1. Nearly 2.5 million people have now signed a petition for a fourth stimulus check
  2. When and why to use Windows Advanced Startup
  3. How can local businesses work together to recover from Covid?
  4. ANZ Bank Charged with Discrimination for Closing Iranian’s Accounts After Sanctions Policy “Violated”
This entry was posted in Account Recovery. Bookmark the permalink.
Amy A. Stuart

Interest rate, other details to know
CLARIM ACQUISITION CORP. MANAGEMENT REPORT AND ANALYSIS OF THE FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)
Categories
  • Account Number
  • Account Payable
  • Account Recovery
  • Account Riot
  • Uncategorized

account number accounts payable bank accounts capitol hill donald trump email address income tax joe biden law enforcement phone number president donald social security states capitol united states washington dc

Recent Posts
  • Local Man Identified By Bumble Match Sentenced For Role In Capitol Riot

  • All-inclusive travel is rebranding itself as premium: what you need to know

  • Gershman Investment Corp. announces data breach | Console and Associates, PC

  • Half of American companies’ invoices are overdue

  • FBI: Scammers are trying to swap your phone’s SIM card and steal your money

Archives
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • Privacy Policy
  • Terms and Conditions
  • Home
  • Account Payable
  • Account Number
  • Account Recovery
  • Account Riot
  • WooCommerce not Found
  • Newsletter