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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.
UK
- There has been some divergence between STIR spreads and the pound for just over a week after the two had shared a strong correlation, particularly since mid-July.
- The initial trigger for the divergence seems to have been the UK CPI print - both FX and STIR assessed the probability of a rate hike to have reduced but the currency moved more than the short sterling - Euribor spread would have predicted.
- Over the past two days we have seen more divergence with EURGBP moving higher (pound weakening) but the Short sterling - Euribor Jun-23 spread has been widening.
- So what else is going on? Could it be that the UK rates market is more influenced by domestic events but the currency market is being driven by some geopolitical events (like Afghanistan) which are seeing the Euro benefit more from safe haven flow than the pound?
- If that is the case, if markets focus less on Afghanistan shortly after allied troops have fully withdrawn from the country, focus in FX markets could shift back to domestic rates, in which case EURGBP should fall back a bit here.
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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