We're simply looking at the difference between two stimulus regimes.
With the BoE indicating that there would be a cap to stimulus, whilst the Fed earlier last week pretty much took a 'whatever it takes' stance, the longer term differential in narrative was created.
Whether that sustains is a different story, since context can change rapidly, but intraday, those comments let to higher UK yields which creates an implied appreciation in cable.
Thanks for the explanation. Will it from now go down, when ADP in USA will be green again? It went up sky high so the pound will go down these days??? What do you think?
Kenayi
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Because the dollar got weaker. The movement happened across the board
FinkPro
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@Kenayi, it did, but the sustained GBP strength was due to the comments.
Kenayi
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@Macrodesiac, well, i disagree as the GBP did not move in isolation. To my knowledge, most; if not all USD pairs moved against it yesterday for perhaps structural reasons.
FinkPro
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@Kenayi, Fair enough to disagree. However looking at yields, that would be your differentiator.
nukecx
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just follow spy and you will know how to trade this.
FinkPro
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@nukecx, True - GBP is a high beta ccy and +vely correlated with risk.
EricKam
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Thanks for your good analysis.
DawnButlers
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Thank you for your analysis. What's your opinion on the current situation? It looks like the energy in the 12h timeframe keeps going up, even though we have downward pressure from higher timeframes.
scheplick
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Great explanation and caught me up on what I missed across the pond :)