Monday, September 08, 2014

Traders Love Volatility

Unsurprisingly, since the publication of a poll that shows that Scotland is sitting on a knife-edge over independence, the pound has fallen.

The Telegraph reports that Sterling suffered its biggest intra-day loss in over a year, sliding to $1.6150 against the dollar, its lowest point since November. This follows last week’s decline of 0.7% as support for the “Yes” campaign continued to rise.

Kit Juckes, head of foreign exchange research at Societe Generale, said:
If the ‘Yes’ vote wins, I wouldn’t be surprised to see a 3pc to 5pc fall in sterling.
So what?

A fall in the value of Sterling will be good for exports, and good for England (in the event Scotland leaves the Union).

That being said, there are ten days left before the poll; during this time the FX traders will be making some serious money playing around with the value of Sterling, as newspaper headlines become ever more shrill wrt "saving the Union".

Traders love volatility!

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