Fun on the farm – or why FX is never predictable

As everyone now knows, there was a big EUR/GBP transaction done against the 1.15pm ECB fix on Wednesday. The deal was linked to the EU subsidy paid out to British farmers every year.

I first heard about the order over a week ago from a contact who had been listening to the Farming Today radio programme on BBC Radio 4 discussing how much better off UK farmers would be as a result of GBP weakness. In 2008, the EUR/GBP rate was fixed at 0.7903; in 2007 it was 0.6968.

Although the information was freely available, I was hoping that people in the market wouldn’t know about it. I was wrong.