Despite the return of Brexit brinkmanship sinking sterling more than 4% against the dollar this month and catapulting implied volatility higher, speculative positioning in the pound measured by weekly CFTC data actually moved marginally more positive last week. That's all the more puzzling ahead of Thursday's Bank of England meeting, where the central bank is expected to signal further monetary easing by year-end and as 2-year gilt yields hit a record low of -0.159%. Some more positive noises about about 'thin' trade deal between the UK and EU eventually emerging has helped sentiment on Monday and Goldman Sachs analysts said market-based probabilities of a 'no deal' cliff edge in around 40-45% were too high in its view. A parliamentary vote on allowing the UK government to break the standing Withdrawal Agreement and breach international law take place late today.
Chart by Ritvik Carvalho and commentary by Mike Dolan.
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