Let’s suppose there was a recent bank merger in a large western European country. Let’s suppose that the acquired bank has been ordered to liquidate it’s proprietary positions. Lets assume that the folks being ordered to liquidate the positions see little chance of surviving in the merged institution. They might just spray the market in haphazard fashion (hell hath no fury like a trader scorned) and be done with it.
Some suggest that is what has happened today in EUR/GBP. But you didn’t hear it from me…
Bottom line: Today’s sterling demand could be a one-off position adjustment rather than any sort of tradable macro sentiment shift. Be careful for confirmation before jumping of the sterling bandwagon.
