Inside the Currency Market: Mechanics, Valuation, and Strategies

British Pound

As London trading closes, British pound will no longer tie to the gilt price. British pound will then seek yields in Frankfurt, New York, and Canadian trade. Frankfurt has one hour of trade remaining, so the Canadian and New York markets become the best trade opportunities for British pound.

In Canadian markets, British pound/Canadian dollar would work well. As the TMX rises on the Toronto Exchange and Canadian bonds fall, yields will rise. This is a long British pound/Canadian dollar, provided London is closed and the gilt connection is broken. If London is open and the FTSE and TMX are up, British pound/Canadian dollar is an easy long trade.

For U.S. markets, as the New York market is up, yields will rise and bond prices will ...