Traders are preparing for the pound to fall by as much as 8%, Bloomberg reports.
The pound is under pressure as government borrowing costs rise (see our market report at 10.17am).
As markets opened this morning, the pound headed towards the $1.21 mark, the lowest level since November 2023.
Bloomberg says: “There’s sizable demand for contracts that pay out below $1.20 — around 1% lower than where the currency was trading on Monday — according to data from the Depository Trust & Clearing Corporation. Some traders are even betting on sterling falling below $1.12, the weakest level in more than two years.”
Jamie Niven, a fund manager at the asset management firm Candriam, told Bloomberg: “The path of least resistance is lower at this juncture.
“On one side, you have very limited pricing in of Bank of England cuts, while the fiscal concerns are also sterling negative.”
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