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Short sterling strip outperforming Euribor/Eurodollars

  • After a relatively slow start to the session, short sterling futures have been pushing higher with a flattening of the curve in the White area. Reds, Greens and Blues are up 3.0-4.5 ticks on the day. Although there have been some further headlines with pessimism over the progress of Brexit talks, of which there will be more headlines later today with Frost appearing in the Lords at 11:30GMT, we think that these moves are merely continued retracements coming off the lows seen following the labour market and CPI data.
  • The Eurodollar and Euribor strips are both a little higher, but both are underperforming the short sterling strip on a day with little in the way of key data releases (US weekly claims the highlight) but plenty of Fed speakers.
  • Despite the moves in short sterling, we have seen more muted moves in GBP FX this morning with both EURGBP and GBPUSD both largely unchanged versus yesterday's close (although GBPUSD is off its highs of the day).

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