The fall of sterling was attributed to rumours of the resignation of British Prime Minister Gordon Brown. Surely, I thought, if the one-eyed Scottish idiot, as one local TV presenter harshly described him, had gone, then sterling would have gone bid. A similar thing happened back in prehistory when Margaret Thatcher resigned. As we all know, change can breed optimism.
But the truth was more prosaic. It seems that the moves were a result of a breakdown in the proposed alliance between Rio Tinto and Chinalco. This resulted in the hedge being unwound in the London Fix at 1pm yesterday.
Funnily enough, only this week I was asked if front running occurred in FX, a subject I’ve written about before. I know what the official answer is, but every picture paints a thousand words. In a rare mood of altruism, I’ll avoid charging my esteemed editor for around 900 of them and avoid naming the bank that did the order. Instead, just look at the graph.
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