Never forget who 'runs the world' really..
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| A report out of the Financial Times this morning has seen the Pound devalue by 0.3% across the board.
For those that are new to these reports, let's first discuss the play of 'buy the rumour, sell the news' and how this 'black swan' event has hurt GBP.
This strategy is based on market anticipation preceding a formal announcement.
Buying the rumour (hype) is jumping on speculation, assumptions or in this case a report and believing it to be potentially true.
The sell the news (fact) part is acting when either something is confirmed or officially rubbished.
As this report was based on the upcoming UK Budget announcement scheduled for the end of November, either;
- Chancellor Reeves will have to confirm or deny the report soon or
- GBP will face the consequences of the play until the Budget or until someone or something more official rubbishes the report and GBP gains back the losses
The report suggests Chancellor Reeves will be dealt a severe blow from the Office for Budget Responsibility (OBR) and that the scale of the 'black hole' in UK finances looks more like £31BN and not £10BN.
A damaging report for all of us concerned, but one that has been cited by "people familiar with the matter". Make of that what you will..
There has been no change in the UK's bond price, so either investors are late to the party or are simply not interested in the news for whatever reason.
Either way, the Pound is in the red today. |
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