Jefferies's Bechtel says short U.K., buy Canada on energy crunch
BNN Bloomberg
Short the UK pound and buy currencies from commodity exporters, such as the Canadian dollar, is a trading strategy recommended by Jefferies Financial Group Inc.
Strategists at the bank are telling clients that there’s still time to profit from the economic upheaval being caused by skyrocketing energy prices. Even though the pound is already weak, it’s likely to keep declining, said Brad Bechtel, the global head of FX.
The pound is already dropped 11 per cent against the Canadian dollar this year, currently trading at CUS$1.5275, the lowest since 2013. If the British economy is stuck in a deep recession during the first quarter of 2023 and oil prices keep rising, Bechtel said he thinks the pound could fall to around CUS$1.45 in a worst-case scenario.
“Getting exposure to some of the energy-producer currencies like Canadian dollar against sterling makes a lot of sense,” he said in an interview.
