The squeeze from hell that has propelled cable higher today continues as the pound reaches 1.6075 thus far, Stops were triggered above 1.6050 and another crop lie above 1.6080, traders report. EUR/GBP continues to slide, fueled in part by hopes that the ECB will increase its commitment to quantitative ease.
We fully agree with the argument that the stabilization in the global financial system has helped the pound given the fact that the UK is so highly exposed to the financial sector but we certainly didn’t expected a 25 cent rise in cable from its lows…looks like we weren’t alone.
The unremitting nature of the rise makes one wonder if some big financial institutions were using short GBP positions to hedge against a collap[se in the financial system. Now that they worst is past, apparently, they may feel comfortable in covering their shorts. Or, the damn shorts are just getting too expensive…
