With just over a month until the U.K. vote on European Union membership, investors are increasing treating the pound like an emerging-market currency.
While sterling was used as a haven during the European debt crisis, the specter of a Brexit has pushed it to the other end of the spectrum. The correlation between sterling and an index of emerging-market currencies has climbed to the highest since the global financial crisis as the June 23 vote approaches. This suggests that, like developing-nation assets, the pound rallies when the market seeks riskier investments, and vice versa.
The correlation is "by no means perverse," said Chris Scicluna, London-based strategist at Daiwa Capital Markets Europe Ltd.
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
- Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
