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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
GBP
- We are revisiting one of our favourite charts: EURGBP vs the Short sterling-Euribor spread. For this example we use the Sep23 spread.
- As we have argued previously, it is the 2-year ahead spread that matters much more to sterling FX than when the first BoE hike will be.
- As the chart shows, at the end of September there was notable sterling weakness (possibly triggered by month/quarter-end flow). During this time EURGBP and rates markets decoupled.
- Since then, rates markets have increasingly priced in a more aggressive Bank of England. We make two observations:
- 1) The "gap" opened up in the second half of September has not fully closed. If it did EURGBP would be roughly one big figure lower.
- 2) Every 15bp extra BOE hikes in a 2-year period roughly equate to a one big figure move in EURGBP.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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