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Mar 19 - 08:36 AM

GBP/USD - COMMENT-GBP/USD At 1980S Levels, But It's Nothing Like The Eighties

By Jeremy Boulton  —  Mar 19 - 06:50 AM

GBP/USD has dropped to a 35-year low but, apart from its level the FX market is incomparable to that time.
In the mid 1980s, spreads were very wide, volume negligible.
An interbank cable spread was 10 pips for 10 million pounds and that was just at a few banks.
Most others were comfortable putting a price on 5 million pounds.
When cable brushed parity it was one account that supposedly turned the tide.
Market depth was a fraction of what is available today.
There has been a run on sterling but that drop has almost certainly got people betting on a deeper drop.
The bigger any short becomes, the greater the risk of reversal.
It's very early days to consider a base and some intervention may be needed to calm shattered nerves and buy time for traders to adjust nL1N2BC082.
That said, there's a good chance the authorities can slow the slide nL1N2BC09V.
The stronger specs push down, the better chance GBP bases.







GBPUSD: Click here

Source:
Refinitiv IFR Research/Market Commentary

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