Best of the Week
Most Popular
1.The Trump Reset, US Empire's Coming Economic, Cyber and Military War With China (2/2) - Nadeem_Walayat
2.Now Is the Time to Buy Gold - 5th Jan 17 - John Grandits
3.CIA Planning Rogue President Donald Trump Assassination? Elites "Manchurian Candidate" Plan B - Nadeem_Walayat
4.The Trump Reset - Regime Change, Russia the Over Hyped Fake News SuperPower (Part1) - Nadeem_Walayat
5.Most Popular Financial Markets Analysis of 2016 - Stock Market Crash Postponed Again - Nadeem_Walayat
6.No UK House Prices Brexit Crash 2016 Despite London Weakness, Forecast 2017 - Nadeem_Walayat
7.President Trump Understands the NSA, CIA... LIE, America's Intelligence Agencies Crime Syndicate! -Nadeem_Walayat
8.President Donald Trump's 2017 New Year Message, BBC Fake News, Was 2016 a Dream? - Nadeem_Walayat
9.Major Stocks Bear Market Still Looms - Zeal_LLC
10.Biased 2017 Forecasts - Debt, Housing and Stock Market (1/2) - James_Quinn
Last 7 days
United States Common Sense - 2017 - 23rd Jan 17
Is Dow 20,000 a Bridge Too Far? - 23rd Jan 17
The New Gold Rush Of 2017! - 23rd Jan 17
HBO HOMELAND Bet on HIllary Clinton Winning US Election and LOST - 23rd Jan 17
Stock Market New Highs For 2017? Yes, But When Do I Enter? - 22nd Jan 17
Active vs Passive Investing: And the Winner Is ... - 22nd Jan 17
The Epidemic of Bad Ideas - 22nd Jan 17
Gold Futures Prices Looking Bullish - 22nd Jan 17
Time for Crude Oil Price Drop below $50? - 21st Jan 17
AI and Robotics - We Are All Low-Skilled Workers Now - 21st Jan 17
The Trump RESET Starts on US Presidential Inauguration Day 2017 - What to Expect - 20th Jan 17
Will the CIA Assassinate Rogue President Donald Trump Like JFK? - 19th Jan 17
Bonds, Dollar, Stocks, Gold, Silver Major Markets at Turning Points - 19th Jan 17
Populism; the Danger? What About Debt? - 19th Jan 17
Gold Price 50-DMA Breakout - 19th Jan 17
Turkey, 'Axis of Gold' and End of US Dollar Hegemony - 19th Jan 17
The Most Important Market Chart on the Planet - 19th Jan 17
Trump Deficits Will Be Huge - 19th Jan 17
Stock Market Trading Patience Pays Off with CHK Using Momentum Reversals - 19th Jan 17
Gold - How to "Buy Low and Sell High" Like a Pro - 19th Jan 17
State of the Global Stock, Financial and Commodity Markets Report 2017 - 19th Jan 17
The Hunt for Russia's Next Enemy - 18th Jan 17
Returning Gold Bulls - 18th Jan 17
Biotech Breakthrough Could Create A $11.4 Trillion Opportunity - 18th Jan 17
Bitcoin and Gold - Outlook, Volatility and Safe Haven Diversification - 17th Jan 17
Stock Market Uptrend on Borrowed Time - 17th Jan 17
The One Stock to Retire On - 17th Jan 17
Trump anti-Communist Counter Revolution - 17th Jan 17
US Stock Market Update as the Trump Inauguration Approaches - 17th Jan 17
The American Crisis - Common Sense 2017 - 17th Jan 17
Obama Leaves, Hope Arrives, Will Stupid Stay? - 17th Jan 17
Damage Inflicted by Precious Metals Manipulation Is in the “Multi Billions” - Keith Neumeyer - 17th Jan 17
Gold Price Forecast 2017 Update - Video - 17th Jan 17
The Story of the U.S. Regime Change Plan in the Philippines - 16th Jan 17
Gold Price 2017 Trending Towards $1375 as Forecast - 16th Jan 17
'Deep State' CIA Director States We are Not NAZI's, Warns Trump Does Not Understand Russian Threat - 15th Jan 17
UK House Prices Forecast 2017 - Crash or Bull Market? - Video - 15th Jan 17

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

How You Can Make Money Shorting the British Pound

Currencies / British Pound Feb 21, 2013 - 03:43 PM GMT

By: Money_Morning

Currencies

Ben Gersten writes: Shorting the yen has earned George Soros more than $1 billion in profits since November.

Now Soros has set his sights on the second-most-shorted currency in the world - the British pound.

And he may have company, as the Financial Times reports: Along with Soros Fund Management, Tudor Investment Corp., Caxton Associates and Moore Capital - some of the best global macro traders - "see similarities in UK's predicament to that of Japan" and are interested in shorting the pound.


This adds to worries about the pound, which has already fallen 5% this year. And with exports falling, productivity low, and gross domestic product shrinking last quarter, Britain's economic outlook is foggy at best.

"There could be a dramatic weakening of the pound this year," one of the world's top macro hedge fund managers, who declined to be named because he does not want his firm's positions becoming public, told the FT.

For Britain's sake, let's hope that weakening doesn't lead to another "Black Wednesday," Sept. 16, 1992 - the day George Soros "broke" the Bank of England.

How Soros Broke the Bank of England
Sept. 16 is the day Soros profited more than $1 billion by shorting the pound.

Technically, the Bank of England didn't break, but by short-selling $10 billion worth of pounds, Soros forced the British government to withdraw the pound from the European Exchange Rate Mechanism (ERM) - a monetary system introduced in 1979 in preparation for the current European Union and use of the euro.

Soros saw the inflationary actions of the British government and the structure of the ERM had caused the pound to be overvalued.

Now there are once again concerns over the pound's valuation, stemming from the appointment of Mark Carney, the current Bank of Canada governor, as the next governor of the Bank of England.

Why It's Time to Short the British Pound
Investors expect Britain to have annual inflation higher than 3.2 % over the next decade - the highest among major economies.

And Carney, who will replace Sir Mervyn King as governor of the BOE in July, said he will allow higher inflation than his predecessor.

The BOE's Monetary Policy Committee also supported higher inflation targets in its February inflation report.

"Attempting to bring inflation back to the target sooner by removing the current policy stimulus more quickly than currently anticipated by financial markets would risk derailing the recovery and undershooting the inflation target in the medium term," the MPC said in the report.

Yet, traders fear Carney will pump too much stimulus into the economy, raising inflation and devaluing the pound even more.

"[Hedge funds] are now looking very closely at what they can do with sterling," Rob Kaplan, chief investment officer of Permal, one of the world's largest investors in hedge funds, told the Financial Times. "With Carney coming in, there are interesting opportunities [either] shorting sterling or going long volatility on sterling."

The best way to short the pound is through options, which can be done in the FOREX market, a global market that deals only with currencies and currency contracts.

There's also the CurrencyShares British Pound ETF (NYSE: FXB), which tracks the pound.

And besides shorting the pound, or sterling, another way to play its negativity is with inflation-linked bonds.

"I'd lean towards further weakness in sterling and appetite for inflation-linked bonds," a senior government bond trader at a U.S. bank told the Financial Times. "The clearest trade for me is for a steepening of yields."

While the British pound could be one of the worst performing currencies of the year, what are the best? Check out our report: The Best Currencies to Invest in for 2013

Source :http://moneymorning.com/2013/02/20/is-george-soros-about-to-short-the-british-pound-again/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife