The UK Treasury's FX "war chest" to defend GBP in run-up to Brexit
A (not surprising) heads up for currency intervention for when GBP goes wild on Brexit date.
The Financial Times citing a Bank of America Merrill Lynch piece:
- UK Treasury built up a foreign-currency war chest to defend the pound in the run-up to the original March deadline for Brexit
- In the last three months of 2018 the UK's foreign exchange reserves grew by almost one-fifth, the largest increase since 2000
- Treasury bulked up its euro holdings
- accelerated pace of foreign-exchange reserve accumulation "was a direct result of increased uncertainty over the UK's post-Brexit future"
- A rerun of similar events into the new October deadline, postponed from March 29, "could have implications for . . . UK FX reserve accumulation" and could weigh on sterling
Here is the link to the Financial Times for more
BoA is referring to the UK Treasury's exchange equalisation account, which holds funds intended to counter "undue fluctuations in the exchange value of sterling".