⚖️💱 GBP Spot Not Following Through W/Swap Spreads: Cable FX Macro

** As seen in Macro Walk report 10/21/22, subscribe at cablefxm.co.uk/reports

• G10FX spot prices have traded mixed when compared to their respective 5yr interest rate swap spreads to the dollar. The pound has followed its differential tightly for most of the last two years

• GBP/USD is now trading off the lows, closer to 1.15 to the dollar. This is also a divergence from the 5yr UK-US interest rate swap spread, which has recently dived further in favour of the dollar, last read at 308 basis points

• Looking at EUR/USD swap spreads, we notice that the pullback in the differential has now retraced somewhat. The 5yr differential is now off the highs seen this year, which favours the dollar, ECB hawkish pricing has been trimmed while the Fed's got extended this week