The Swiss Like Sterling

Good morning, Friends, on this semi-holiday and quarter end session.  A Swiss National Bank official, apparently finding the market too boring, mentioned that the SNB will be adding more Sterling to its reserves, presumably at the expense of its vast Euro holdings.  While he noted that this will likely take place over the next year, the FX market tends to discount all news immediately, so there has been a nice spike in GBP/USD. There are still some orders around to sell Cable between 1.5705 and 1.5720, so it will be interesting to see if (and how quickly) they can be chewed through.

P.S. As it turns out, the high was 1.5716; once shorts were covered, and enthusiastic new and fast money tossed into the ring, traders reread the item, and were reminded that “over the next year” is actually a fairly long time, even if a purchase of GBP 6 billion or so is being contemplated. It was good for a quick (almost) cent to the upside, but that seems to have been enough to satisfy demand, at least for now.