The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

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. On Wednesday morning, Nomura sent out a note: “There is persistent talk of a large (€3.5 billion) lefthand-side fix in EUR/GBP linked to an EC subsidy to farmers.”

Given that EUR/GBP was almost two big figures off its highs at the time, it would seem that a lot of people had positioned themselves to receive some of the yardage from the order. It makes you almost feel sorry for the bank that had won the mandate to do the trade. I won’t compound its misery by naming it.

Almost inevitably – hindsight is a wonderful thing – rather than crapping out, EUR/GBP rallied. This may be for numerous reasons, including the fact that the market probably got itself short ahead of the order; that it was not for €3.5

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree