Why is the GBP crashing against the USD?
- Thread starter kmiklas
- Start date
GBP is not really crashing.
It is actually USD that is doing most of the work.
For the past few months, most major currencies (aud eur gbp cad jpy ....) vs USD are down.
For the past few days, most major currencies have been range-bound.
Sooner or later, there will be trend exhaustion.
The 1.2 GBPUSD level doesn't appear to be a significant level.
It is actually USD that is doing most of the work.
For the past few months, most major currencies (aud eur gbp cad jpy ....) vs USD are down.
For the past few days, most major currencies have been range-bound.
Sooner or later, there will be trend exhaustion.
The 1.2 GBPUSD level doesn't appear to be a significant level.
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yield differencials work better on cross pairs. USD has so many inputs that overshadow yield diffs importance. But yeah, in the end, yield diffs and currency values always converge, even if it takes 5 years.
hmm, two threads about gbp value today...and with same sentiment...
We see usd strength across the board not just against the pound. Canadian dollar trades at the weakest level against the usd in quite some time. We are in a risk-off environment and that means moves into usd, the yen, and swissie.
This is really outdated logic about market relationships. Usd can easily rise during risk on, so could jpy and chf and vise versa. It"s all about context.
I am referring to times when fear takes over the market. Rarely if ever do you see sustained outflows of yen, swissie, usd during that time. And that for decades. Anyone can verify this claim by looking at historical data. Build fx baskets from historical cross ccy data and overlay with vix or other volatility measure.
You talk about risk on/off environments but don't support the idea of investing in a higher yielding asset (carry trade in fx) ? Of course investors search for yield, where do you think the term carry trade comes from?