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    GBP risk no longer radiates - Commerzbank Sandeep Kanihama

    Ulrich Leuchtmann, Research Analyst at Commerzbank, suggests that the character of the FX risks has changed following the referendum.Key Quotes“We are now seeing GBP-specific risks rather than general risk-off moves on the FX market. Before the referendum and during the night of the referendum other exchange rates showed high correlation with the GBP exchange rate. Every time Sterling traded weaker, euro, the Scandies and the dollar block currencies also depreciated against the safe havens USD, JPY and CHF (albeit on a smaller scale). This correlation ended and we are now seeing idiosyncratic GBP weakness. That makes sense.Until the night of the referendum there was a fear the FX market could become dysfunctional. In an environment such as that investors prefer to be invested in safe havens as they lose their ability to manage their position. Of course this fear turned out to be unfounded. As a result the GBP risk no longer radiates.The GBP risks are once again seen as what they really are: long term risks.”

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