Rebirth of the Capital Legend

Despite the current market news, the overall trend is still bullish, and the Bank of England is clearly increasing its intervention in the foreign exchange market.

However, it is a fact that the trend of the pound exchange rate is lower than expected.

Years of market trading have made Andrea confident in her trading choices while also teaching her to respect the market.

Obviously, the news and sentiment of the market are still in the direction of bullish dominance, but the trend is getting weaker and weaker. In her opinion, this can only mean that the potential bullish force in the market is declining, and the bullish force of the market is weakening, while the corresponding differences are getting bigger and bigger, and there are already signs of a shift to the bearish direction.

"According to the latest intelligence feedback from our marketing department..." Hearing Andrea's question, Ivangeline, the market intelligence officer of the main fund product of UBS International Andrea Hedge Fund, responded, "The trading department of Barclays Bank Lion International Hedge Fund is indeed continuing to increase its short position in the British pound exchange rate."

"Is Claude... crazy?" Enid, the market analysis director, said in surprise. "Shorting their own country's currency exchange rate and standing against the Bank of England, what good will it do for their organization? If the pound exchange rate collapses, their foreign exchange and investment businesses will also suffer huge losses. If the pound exchange rate shows an extreme appreciation trend, they will also suffer huge losses if they short the pound exchange rate on a large scale. In short... shorting the pound exchange rate is a very stupid investment strategy no matter how you look at it!"

"I think so too," Evangeline said. "And it's not just a financial loss. The Barclays Bank Lyon International Hedge Fund's actions have also put a lot of pressure on public opinion. I don't know what Claude is thinking. He actually stood on the same side as Wall Street capital."

"But if the reputation of Barclays Bank collapses, it will be a huge opportunity for our business in the UK." Enid thought for a moment and said, "No matter how you look at it, it feels like Claude is reaping the fruits of his own action."

"From the past, the Barclays Bank Lyon International Hedge Fund managed by Claude has always been known for its stable investment..." Evangeline still didn't quite understand, "I really don't know why this guy would choose to short the British pound exchange rate on a large scale at this time."

"Besides the news that Barclays Bank Lyon International Hedge Fund is still shorting," Andrea pondered for a moment and continued to ask, "Are there any other important news in the current market? Regarding the Bank of England, the referendum vote count tomorrow, the British government's internal opinions on whether to leave the EU or not...Are there any major changes in these various news?"

Evangeline continued to respond: "As far as I know, there are no major changes in the news at the moment."

"That's really strange." Andrea frowned, "Why is the short position in the market increasing so sharply?"

"Could it be that the Wall Street capital institutions and Chinese institutions trapped in the market are desperately fighting back, hoping to use extreme market pressure to force the many uncertain longs in the market to cover their positions before the referendum result comes out tomorrow, so that they can close their positions and leave the market without loss?" Enid pondered for a while and said, "On the whole, this is the only logical reason for the weak performance of the pound exchange rate."

"But..." Evangeline thought carefully for a while while Andrea frowned, and then continued, "It seems that the pound exchange rate has collapsed in the black market of global foreign exchange business outside the formal market. Many investment companies and trading companies around the world are selling a large number of pounds in their hands, hoping to exchange them for dollars with higher certainty and spot gold."

"What is the current exchange rate of the pound on the black market?" Andrea asked hurriedly.

Evangeline shook her head and quickly turned around to call other intelligence agents in the market intelligence department. Then, about ten minutes passed.

The intelligence officer from the market intelligence department quickly responded.

"The exchange rate of the pound sterling in most black market institutions has fallen to around 1.4600 points." Evangelin said, "Moreover, the global institutional groups with a large number of pound sterling currencies seem to be selling pound sterling currencies on the black market, including some well-known Wall Street capital institutions."

"A well-known Wall Street capital institution?" Andrea asked anxiously, "Who are you referring to?"

Evangelin said, "It's Bank of New York Mellon and Japan's Nomura Bank. I heard that Bank of New York Mellon and Citibank have relatively restricted their customers from using pounds to exchange for U.S. dollars on a large scale, or using pounds to directly purchase spot gold."

"Sure enough, these guys...can't suppress the market and take the initiative in the open trading market, so they start to use these tricks." Andrea sneered and said, "I didn't expect that the pound exchange rate on the black market has dropped to 1.4600 points. No wonder the pound exchange rate trend is under such pressure in the open trading market, and no wonder the short-selling force on the market is getting stronger and stronger."

"By restricting customers from using pounds and exchanging them for U.S. dollars and spot gold on a large scale, they created a panic in the market to sell pounds, forcing a large amount of pounds to flow into the black market. Then, this group of Wall Street investors deliberately lowered the black market pound exchange rate by selling some pounds on the black market..." Enid pondered, "Finally, they used the lower black market pound exchange rate to influence the open market pound exchange rate, allowing them to open a huge short position in the pound exchange rate market and realize huge profits. This trading method... I have to say, it is really ingenious!"

"The most fundamental reason why this trading method can be implemented is that tomorrow's referendum is bound to cause extreme fluctuations in the pound exchange rate. Many financial institutions, investment companies, multinational trading companies and other entities that hold large amounts of pounds around the world have a strong desire to avoid risks and sell pounds. This is what has caused the current market trend, right?" Evangelin thought for a moment and said, "I think Claude, the manager of Barclays Bank Lyon International Hedge Fund, should have seen this and made the decisive investment decision to short the pound exchange rate."

"How much US dollar foreign exchange reserves did the Bank of England release into the market yesterday and even recently?" After sorting out the fundamental logic behind the current weak market trend, Andrea did not rush to make a decision, but continued to ask.

Evangelin responded: "According to our estimates, the amount of US dollar foreign exchange reserves released by the Bank of England to the market in the past week or so is about 300 billion US dollars."

"Oh, it's too little." Andrea frowned more and more deeply. "Brian is always too conservative in his determination to maintain the exchange rate market. No wonder he is led by Wall Street capital."

"A $300 billion injection is... a lot, right?" Enid said. "Based on the Bank of England's past market operations, this is already a very aggressive injection."

Andrea said: "If it is during the normal time when Wall Street capital is jointly shorting, in order to maintain the stability of the market exchange rate, the amount of money released by the Bank of England is naturally sufficient and sufficient to stabilize the market exchange rate, but when is it now? It is the critical moment of the referendum on Brexit.

The world's active funds are concentrated in the British pound exchange rate market.

Countless financial institutions are involved.

It can even be said that this referendum on Brexit is an extremely important historical event that will determine the future destiny of the United Kingdom and even the direction of global economic expectations.

At such an important moment, with the full participation of global active speculative and investment funds.

Countless institutions are seeking to avoid uncertain risks and sell the pound.

The more than 300 billion US dollars released by the Bank of England is naturally scarce, which is why the exchange rate on the black market is so different from that on the open market.

It is estimated that it is not just BNY Mellon and Nomura that are unable to use the pound to exchange for US dollars and gold on a large scale. Many financial institutions around the world will quickly react in the same way as BNY Mellon and Nomura, facing the nearly collapsed pound exchange rate on the black market and the countless institutions, companies and individuals scrambling to sell pounds.

"If financial institutions around the world follow suit and restrict foreign exchange transactions related to the pound... that would be really bad." Enid's heart skipped a beat. "This will further force funds to black market transactions and further depress the black market exchange rate, which will further pressure the pound exchange rate in the open market. At the same time, it will also cause countless institutions, companies, and individuals around the world who hold pounds to have a greater desire to sell, and even panic.

And once this sentiment spreads...

Even if the Bank of England responds by releasing more foreign exchange reserves, it is unlikely to reverse the panic selling of the pound in a short period of time.

"Hearing what you said... the bulls in the market are in danger?" Evangelin's expression became serious at this time.

Andrea let out a long breath and said helplessly, "It's not just dangerous, it's almost on the edge of a cliff, and the decline has already occurred. It's difficult to reverse it."

"But aren't the central bank's monetary policy and intervention in the foreign exchange market still positive?" Evangelin said. "And the expected referendum results tomorrow. With the support of the preliminary vote count, isn't it clearly leaning towards staying in the EU, which is the result everyone wants?"

"The underlying logic supporting long positions has not changed, but..." Andrea sighed and said, "In the global market, the vast majority of people, especially those foreign trade companies, retail investors, hot money groups, and the millions of ordinary people who hold British pounds and have little discernment, do not have such a deep understanding.

It is precisely these groups that are most easily influenced by emotions and most likely to be swept away by emotions and make follow-up actions and judgments.

in other words……

In the exchange rate market.

What ultimately determines the true direction of the exchange rate is sometimes not the central bank, but the combined force of all funds.

As of now, it is obvious that the market intervention of the Bank of England has become somewhat ineffective, and all the funds in the market have shifted significantly to the short side under the influence of the sentiment of the collapse of the black market exchange rate and the operation of countless people around the world following suit to sell the pound in order to avoid uncertainty risks.

If the next few hours.

The Bank of England and its affiliated financial institutions were unable to respond strongly and decisively release larger amounts of foreign exchange reserves into the market.

So, there are the long and short forces on the market, as well as the long and short forces in the actual offline trading market.

There will definitely be further imbalances.”

"So... does our organization also need to use more time?" Enid asked, staring into Andrea's eyes.

Andrea turned around and took a look at the huge long positions summarized on the fund's main computer interface, as well as the pound exchange rate that continued to fall and had already broken through 1.5160. She gritted her teeth and said, "In order to avoid extreme risks, our institution has to turn to short positions more often."

"But it won't be easy for us to cover such a large position." Enid said, "Once we close all the positions, it will definitely attract the attention of the main short-selling institutions in the market. At that time, these institutions will accelerate the sell-off, and the market's long-term support will be rapidly devoured, which will also trigger a stampede among the longs in the market."

"I know it's not easy, but we have to do it." Andrea's eyes were sharp and she was determined. "Brian doesn't have the courage. We can't bet such a large position on the Bank of England's immediate and correct market operations. If we miss this opportunity to reduce our positions and cover our losses, we will be trapped when the long positions in the market further decrease. It's not too late to decisively reduce some positions and avoid extreme risks while the overall losses are not too large and many long institutions in the market have not yet reacted."

"Okay!" Enid sighed and reluctantly agreed to Andrea's investment decision.

Afterwards, Andrea immediately issued trading instructions to each trading team in the trading room to quickly close and cover their positions and quickly reduce their long positions.

And accompanied by the stop loss of 'UBS International' and the large reduction of positions.

In the pound exchange rate market, the pound exchange rate trend once again broke out of a big dive.

At 5:10 p.m. Yanjing time, under the attention of countless investors, speculators, major long and short institutions, and even central banks of various countries around the world.

The pound sterling exchange rate fell below 1.5100.

It hit a recent low and completely fell through the previous 1.5200 to 1.5400 range platform.

And at the same time...

Countless investors, multinational trading companies and ordinary individuals around the world were forced to follow suit and panic-sell the pound, almost leading to a run on other mainstream currencies with more stable exchange rates, as well as spot gold.

Many multinational banks and foreign exchange financial institutions around the world have foreign exchange businesses.

They have all begun to relatively restrict customers' concentrated and large-scale foreign exchange business.

It was not until this time, when the trend of global capital panic selling of the pound formed, that the Bank of England truly realized the seriousness of the situation and the ferocity of the short-selling capital in the market.