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5 May 2015
GBP/USD a sensible sell into UK’s political chaos – SG
FXStreet (Barcelona) - According to Kit Juckes of Societe Generale, with no expectations of any reduction in the political uncertainty event after the UK elections, GBP/USD remains a sell.
Key Quotes
“GBP/USD is a much more 'sensible' sell than EUR/USD, as we enter election week, with no decrease in the likelihood of political chaos thereafter.”
“It is going to be very hard for anyone to form a stable Government after Thursday night. I can't see how that helps sterling. Mohamed El-Erian, in today's FT, thinks the differences between the parties, and even the risk of Brexit, is smaller than 'market participants' think. maybe. But he also highlights 'gross underpricing of liquidity risk' which is the big market 'theme du hour' and surely the big lesson from the speed and scale of the bond market correction.”
“In a liquidity crisis, would I want to be long the currency of a country with no proper government, and huge twin deficits? Even if I were super-optimistic about the medium-term outlook, I might be a touch jittery....”
Key Quotes
“GBP/USD is a much more 'sensible' sell than EUR/USD, as we enter election week, with no decrease in the likelihood of political chaos thereafter.”
“It is going to be very hard for anyone to form a stable Government after Thursday night. I can't see how that helps sterling. Mohamed El-Erian, in today's FT, thinks the differences between the parties, and even the risk of Brexit, is smaller than 'market participants' think. maybe. But he also highlights 'gross underpricing of liquidity risk' which is the big market 'theme du hour' and surely the big lesson from the speed and scale of the bond market correction.”
“In a liquidity crisis, would I want to be long the currency of a country with no proper government, and huge twin deficits? Even if I were super-optimistic about the medium-term outlook, I might be a touch jittery....”