FX and the realists

My career started in the late 1970’s working in the foreign exchange department of the Bank of America in the City of London. Lovely people, well paid work and a bunch of dealers who would buy or sell their mother on a ten point spread and many of whom only ever read the sporting pages of The Sun.

It was also a very laissez faire and realistic place, currencies were worth what someone would pay for them, nothing more nothing less. Which is why the fall of sterling in the last 4 years should make you sit up and take notice; it has fallen from well over 1.30 against the Euro to 1.10. With the expectation that there may still be a deal included in that price, if there is no deal by Sunday the markets will open on Monday to yet another fall. Depending on where you start your calculations and where the pound ends up, that is a fall of between 15% and 20%.

Now ask yourself this: Why do thousands of hard nosed, free market loving dealers, from all over the world think the UK’s currency is worth so much less than 4 years ago and why will a no deal Brexit make that worse?

https://jonty.substack.com/

https://jonty.substack.com/