Sterling sinking below 1.05 per dollar -- something it has never done before and unthinkable only a few months ago -- is now given about a 1-in-35 chance of happening before the end of September by option markets. It would be great to come up with a contrarian take on why this is a long shot, but from a hard-nosed data perspective, it’s tricky to find anything rosy-looking for sterling over the next few months. Real-rate differentials are marginally supportive, but show nothing compelling. Economic data in the UK is continuing to disappoint, although at a rate similar to the US, so giving the pound no relative ... (full story)