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vs STIR Spread: Has the GBP move just been a re-correlation move? (2/2)

GBP
  • The chart below shows the moves in relative rate differentials. There have been some breaks in the correlation in recent periods - for example at the start of the Ukraine war the STIR spread narrowed but GBPUSD move lower. And there was also a rebalancing until around Easter (when UK rate expectations via STIRs decoupled a little from the gilt curve too). But in general, based on the correlation, it looks as though GBPUSD has moved to an appropriate level versus money market pricing.

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