I am personally wondering why GBP is gaining against USD.. What are the reasons?
Is it because of the Interest Rate? Both USD and GBP have the same 5.25% interest rates. No one have any advantage at all. GBP is perceived to raise rates further this year while most expect a rate cut for USD. perhaps this is a reason?
Is it because of the Economy? US GDP is about 2.0%; UK GDP is below 1.0%. Its idiotic to say UK economy is doing better.
Is it because of Politics? No comment here - I dont know what is brewing in the political arena for these coutries.
One thing I know that is GBP Positive is the M&A. There has been lots of UK companies being sold out.... from my perspective, if UK kept selling more companies, there wont be any UK Company to drive the UK Economy...
Finally, the Carry Trades! Long GBPJPY kept piling especially now that UK just increased the rates to 5.25%! I bet this is another GBP Positive reason. But what if these carry traders unloaded?
