Betting Against UK And Commercial Favorites In The Stock Market

(Bloomberg) – An excellent start to the pound to the year from 2018 attracts some of the world’s biggest investors to gamble against the UK.

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They see the economic downturn as a result of Brexit and high inflation over the next decade as good reasons to remain optimistic. Although the fund has met with pressure from Prime Minister Boris Johnson, the prospect of higher taxes that burden consumers is increasing the conviction that the pound’s strength will not last.

“We expect the pound to gain weight by the end of the quarter as April’s UK tax increase reflects real currency pressure,” said Jane Foley, Rabobank’s foreign exchange chief. “This allows the market to reconsider its expectations for inflation for the Bank of England this year.”

He expects the pound to drop to $ 1.33 by the end of the quarter, down from $ 1.37 here. The stock has risen by almost 1.3% this year, making it one of the most powerful foreign investors.

James Athey, director general at Aberdeen Asset Management, began betting this month that the pounds would fall in value compared to the yen. Amundi, Europe’s largest treasurer, is a minor. Steven Barrow of Standard Bank, whose betting refunded more than 48% last year, advises customers to reduce their interest rates in dollars.

‘Overvalued Pound’

For Valentin Marinov, G-10’s chief financial officer at Credit Agricole SA in London, the current rate clearly shows what the Bank of England is doing to raise interest rates in December.

“We remain cautious about the extra pounds,” Marinov said.

Technological advances, such as hedge-fund positioning, have also led to the conference. Observers have significantly reduced their betting to lower pounds by the end of last year, which helped raise the bar. With a few shorts on the market, there is a chance to come back, Marinov said.

In fact, other experts such as Goldman Sachs Group Inc. says the pound meeting is not over. Advertisers are also less likely to be cautious. Bearishness per pound is the lowest for about two months, based on a one-year risk change, to assess market conditions.

“Employee knowledge in the UK has been strong,” said Kamakshya Trivedi, Goldman’s chief economist at global economics, pricing and market research in London. “There will be strong assumptions that prices should start to shift due to rising inflation, as well as the current economic downturn due to omicron divergence.”

Yet, for many, there is still considerable uncertainty. A carefully monitored weight gain, a 14-day strong indicator, shows that the pounds were overweight for the first time in 11 months.

Even bulls care. State Street Global Advisors Ltd. it is far-fetched, but acknowledges that labor constraints and staff shortages are major challenges facing the economy.

“We still struggle to be more confident in the UK,” said Altaf Kassam, the company’s chief financial officer and researcher in Europe, the Middle East and Africa.

Next week

  • Inflation will be even more important if the eurozone countries and the UK report CPI data. PMI products and services are also required from France, Germany, euro area and UK

  • Britain will sell magilt up to GBP2.5b, while Citigroup Inc. compares approximately EU21b export bonds from Germany, France, Finland and Spain.

  • Speakers at the central bank include Villeroy and Holzmann of the ECB, while Mann’s BOE will address economic and financial issues.

Highlights from Bloomberg Businessweek

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