Silver as an investment

Dollar-Pound Parity Is Increasingly Likely

Source: FactSet

Source: FactSet / 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.

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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.


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