EU BASIC INDUSTRIES: Stora Enso: Asset Sales #3
Spreads have shown little rating concern, trading at the tight end of low triple B Basic Industries....
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SONIA: Put Fly Buyer
SFIU5 95.90/95.80/95.70p fly, bought for 1.5 in 2k.
EQUITIES: EU Bank Call spread seller
SX7E (20th June) 202/215cs, sold at 4.45 in 10k vs 3.7k at 202.50.
GBP: GBP/USD Still Struggling Above 1.34 Pre-CPI
The GBP trend condition is undoubtedly positive, with the pick-up in the S/T upside trend for spot evident in the growing premium of the 50-dma over the 200-dma - which now sits at its widest since October last year. This keeps the $1.3400 handle in focus, a level that markets have had difficulty in sustaining a move above on several occasions this year, as well as in 2019, 2020 and 2024. The keeps focus on the bearish tweezer candle formation printed on April 28/29, which could mark a near-term top.
- Overnight GBP vols have ticked higher ahead of the print, and now clear 10 vol points against the USD and 7 points against the EUR - although outright implied remains well below recent tariff-tripped highs. We see EUR/GBP vols as a cleaner read, which post a near 3 point vol premium into the CPI print - the largest pre-UK CPI premium of the year so far.
- As a result, a downside surprise for CPI tomorrow could see a correction lower of decent size, particularly as the market maintains a net long GBP position which, while off the year's best levels, still accounts for a net of 14.0% of open interest.
- 1.3342 undercuts as first support, ahead of the more meaningful 50-day EMA at 1.3126. A move through here would challenge the near-term bullish trend narrative.
