{quote} Alot of it is political sentiment these days. The east are gathering up as competitors. One day the currency is considered strong as hell, and it always been so. The next day the U.S/U.K is falling apartI think the money will change pockets at an unprecedented rate, as investors/traders are uncertain on where money will be safe due to digitalization and regulations. This is just a corrective move down before it goes up again. U.K have more stabile banking system than Switzerland or U.S. JPY and GU good bets for the year. Anyways atleast...
Rates are high or its excepted to rise than currency is strengthening and vice versa. you can backtest this through history with a pretty accurate hit rate if you include some small delay.
To give you more a practical example: So the European head office for currency trading for commercial clients from ING Bank is located in Amsterdam. There is a small Team always in contact with high net commercial clients who do business worldwide and who need to buy, sell and swap currency's every day, billions of it. So if the central bank of turkey now would change their low interest rate path credible with a whole concept to fight inflation with hiking rates as long as it takes, you can be sure that every client who is doing business in turkey will want to buy turkish lira cheap right away before the value of the lira will rise. And because of the demand of lira which is rising the price is rising too. This is ofc applies to every bank / financial institution iam just mention ING randomly.
in conclusion i can assure you, if the upcoming UK Data also supports "no rate hike" as strong as the last CPI and the other Currency giving more of a hike impression the odds of a higher cable are slim. i mean not impossible i guess, but i like to play a hand where the odds are on my side.
defence...
