Presenting: The Trade Of The Day

Ok, raise your hands: who was short GBP/CZK going into the BoE decision?

I imagine this is one show of hands that produced a room full of full pockets, but on the off chance anyone is gleefully shouting “me! me!” congratulations, because that was the trade of the day.

Have a look:

GBPCZK

At the exact same time the BoE 6-2 crossed, this hit the wires:

  • CZECH CENTRAL BANK RAISES KEY INTEREST RATE TO 0.25%

That’s Europe’s first rate hike and it comes as Czech policy makers are actually seeing above-target inflation:

CInflation

Apparently, the Czechs have found that they too have a housing bubble as a result of accommodation. “Apart from curbing future inflation, the central bank is also trying to a avert a potential mortgage bubble after Czech home prices grew at the fastest pace in the EU for two quarters,” Bloomberg writes, adding that “rate setters are dusting off their conventional toolbox after exploring the extremes of monetary policy with a Swiss-style currency cap on koruna appreciation that was imposed in 2013 and scrapped in April.”

Of course the Koruna also rallied against the euro, with today’s gain against the common currency among the largest one-day moves since the above-mentioned cap was abandoned.

EURCZK

“The hike was a game-changer for EUR/CZK, which dropped more than 0.7% despite the fact that it has been somewhat expected by the markets,” Nordea analyst Natalia Kornela Setlak wrote in a note Thursday.

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