wallstreetexaminer.com / by Cameron Saucier via Money Morning /
For the first time in history, dollar-pound parity could become a reality. In other words, the pound could soon be worth as much as the dollar.
So if you’re thinking about taking a trip to Great Britain, now would be a good time…
Over the past 10 days, Britain’s currency has hit a new low against the dollar, falling 5.4% to $1.22 on Tuesday intraday. This is the first time the pound has depreciated this much since June 1985.
A number of options traders are betting on dollar-pound parity, according to Bloomberg. Already, several traders have booked long-term puts with a strike price of 1. That means these traders will profit if the dollar becomes more valuable than the pound.
Over the past six months, the cost to hedge against a sudden fall in the pound has widened by 2%, Bloomberg reports. In other words, there’s an increased cost associated with betting against the pound. And that means more traders are expecting a drop.
So why is the pound plummeting in the first place? As it turns out, the source of the currency’s woes started back on a single day: June 23.