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Trading News Is spread betting the best gauge for UK Euro entry?
Trading News Is spread betting the best gauge for UK Euro entry?
Is spread betting the best gauge for UK Euro entry? |
| Written by Trader Hideout Editor | |||
| Friday, 05 December 2008 15:03 | |||
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According to the Guardian, the exchange rate of sterling versus euro and the premium of UK government bonds versus German ones are indicators that will signal whether the financial markets are betting that Britain will enter the Euro. The current financial crisis worldwide has meant that some people in Britain are now more open to the idea of Britain entering the Euro, according to Jose Manuel Barroso, European Commission President. So far, British politicians have been wary of this idea and although few experts are taking Barroso’s comments seriously at the moment, if his views are right then financial markets would need to rethink how several of British assets are valued at the moment. "We take the Barroso comments with a large pinch of salt but if anyone were to seriously believe that the UK might enter the euro, they would have to decide on the timeframe and then look for the entire (UK) yield curve to converge towards the French or German ones over that period," said Hans-Guenter Redeker, global head of foreign exchange research at BNP Paribas. "If you really believed this, you would also buy sterling like there was no tomorrow.”Any trader that believes Britain will enter the Euro would want to buy sterling against euros and what is possible the best gauge of whether or not Barroso’s comments are true may be the level of spread betting on the topic. Financial spread betting firms are not seeing an increase in the number of spread bets currently placed on British euro entry. In fact, William Hill spread betting said they have had only 3 spread bets on British euro entry in the last three years and spread betting company IG Index has also reported little interest in this spread bet.
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