Managing sterling risks
We rarely recommend isolated positions in cable or euro/ sterling, because these positions are largely driven by broader trends in euro/dollar. The correlation is obvious immediately if one overlays a chart of cable over a chart of euro/dollar -- the two lines move in lockstep. A regression euro/sterling on euro/dollar suggests that a 2% move in euro/dollar produces a 1% move in the same direction for cable. Hence, while trade-weighted indexes typically give the euro a much bigger weight than
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