We’ve seen some good two-way action on this pair in a tight-ish range this week
Yesterday I highlighted that we were heading into sell-interest above 0.8445 and went short at 0.8444, picking them back up quicker than I would have anticipated at 0.8410 not long after I signed off. The better CBI data helped shunt it back down for sure.
Ryan then posted about the demand around 0.8400 and we’re currently at 0.8411 again having tried to break lower.
Usually month-end brings with it a natural demand as the Bundesbank buys euros with the pounds that the UK pays the EU for its monthly contributions. We mention this each month and that the impact on the market is variable dependent on prevailing sentiment.This time every year though it’s not that simple as we also see the annual farming subsidy paid back to the UK so that results in a demand for GBP of around 2.8 bln.
The subsidy is due on the 1st October but is usually executed on the last day of September.
In a world of common sense you’d think that the BOE and BUBA would have a chat and net the trades off. But that doesn’t happen.
So expect more of the push-me pull-you price action for the next few days as traders front run both sides. The two individual pairs will also be affected if traders “leg” ( split) the execution.
Eamonn also sent me this link to an article in the WSJ
