Su Yi stared at the British Pound exchange rate, which had fallen back below the 1.5300 level, and at that very moment, the rapidly expanding trading volume, as well as the rapidly increasing open short positions in the market.
A clear look of surprise was visible in his eyes, as he found it utterly unexpected.
Originally, he thought...
Under the influence of market news and sentiment.
Especially with market rumors that the Bank of England was increasing its intervention in the British Pound forex market, and with preliminary vote counts already indicating a clear outcome to remain in the EU.
The British Pound exchange rate would be forcibly pushed higher by the major long-position institutions in the market.
It would break above the 1.5400 level, and even test the bears' final psychological defense line pressure at the 1.5500 level.
However, unexpectedly, as soon as the British Pound exchange rate approached the 1.5350 level, it encountered a massive selling short counterattack, rapidly falling back below the 1.5300 level.
"Damn, that short order that just crashed down must have been over 100,000 lots, right?"
As Su Yi was surprised, in the trading center of Huayin International's Investment Department Two, which was linked with Su Yi's Huayi Capital, Meng Shengfei was also surging with emotion, his eyes fixed on the British Pound's trend. Clearly startled, he exclaimed, "Such a large move, it looks like a major institution has entered the market!"
"There's no unusual movement in the market news either, what exactly is going on?" Kong Fansheng, manager of Huayin International's Investment Department One, equally puzzled, also asked in surprise, "Such a massive short order right from the start, logically inferring... acting so decisively, they must have received some insider information, right?"
"If I'm not mistaken, that move just now... it should be European capital." Frederick, from the Aberdeen Asset Evolution No. 1 major hedge fund trading room, who was also connected via instant messaging with Huayi Capital and Huayin International, replied, "After all, whether it's Goldman Sachs Group, BNY Mellon, Citibank, or Blackstone Group... their main trading offensive time is generally during the US trading session. Usually, these institutions would not engage with major long-position institutions in this manner during the European trading session, especially when the bulls have an absolute advantage on the market."
"European capital?" Meng Shengfei pondered for a moment, then asked, "To make a move of this magnitude instantly, the amount of capital they can deploy must be at least tens of billions of dollars. This means that such a trading maneuver could only be executed by a top-tier major institution among European capital, but the number of such institutions in European capital is very limited. Which one could it be? Barclays Bank? Paris Investment Bank? It couldn't possibly be UBS, Pacific Capital, or Huifeng Bank, could it?"
"We'll know who it is soon enough," Su Yi said with a smile, responding. "There are no impenetrable walls in the market. Such a massive short-selling operation is very difficult to hide."
"It feels like UK domestic capital." After pondering for a while, Kong Fansheng also said at this point, "And for this capital to suddenly short-sell so massively, they must have received some very clear information through their intelligence channels, which is why they are so eager to conduct large-scale position building operations in this manner."
"I think so too." Frederick nodded slightly.
"What kind of news could be influencing this?" Meng Shengfei wondered.
Frederick thought for a moment, finding no clue, and couldn't help but instantly look towards Adrian, the fund manager's assistant responsible for market information collection and intelligence business.
Adrian noticed Frederick's gaze.
He quickly picked up the phone and called the company's Market Intelligence Department and Market Information Department.
However, the main supervisors of both departments replied that there was no significant unusual movement in the market news.
"No unusual news?" Noticing Adrian's change in expression, Frederick asked with a smile, "How is that possible? Then, can we find out who this institution is that suddenly went on a massive short-selling spree on the market?"
Adrian connected the calls from the Market Intelligence Department and Market Information Department. The heads of both departments responded, "The orders were executed directly from the London Exchange, through a dedicated market investment seat. The European UK domestic investment institutions that possess this dedicated investment seat and also have market maker qualifications are only a few, such as Huifeng Investment Bank, Bank of England, Pacific Capital, and Barclays Investment Bank."
"Huifeng, Bank of England, Pacific Capital... are the absolute major long-position players in the market." Frederick pondered for a while longer, then added, "What is Barclays Investment Bank's current attitude towards the British Pound exchange rate market? Do they still hold massive long positions?"
Adrian replied, "To my knowledge, some time ago, several major fund products under Barclays Investment Bank had already exited their long operations in the British Pound. Among the top-ranked institutions by long positions disclosed in the market, Barclays Investment Bank is not present."
"Could it be this old British institution?" Frederick speculated.
"It's quite possible." Hearing Frederick's guess, Su Yi pondered for a moment and said, "This institution's investment approach has always been relatively rational, and their recent investment analysis reports on the British Pound exchange rate also indicated risks, suggesting a view that the British Pound exchange rate has a risk of extreme decline."
"Hehe..." Meng Shengfei replied at the opportune moment, "If Barclays Investment Bank has indeed switched from long to short, then this bull-bear battle will truly be spectacular."
"If it really is Barclays Investment Bank..." Kong Fansheng thought for a moment and also said, "I'm afraid the reasons that led them to adopt a long-to-short investment strategy are not limited to the risk issues mentioned in their previous investment analysis reports; there must be other important reasons, which we are all currently unaware of."
"No matter, if we don't know the reason, we don't know." Meng Shengfei said, "As long as there are large institutions switching from long to short, as long as the British Pound exchange rate trend is downward, as long as the momentum of the bulls on the market can be suppressed, causing the speculative long players in the market to believe that the British Pound exchange rate has not escaped its volatile range movement, and thereby guiding this part of the speculative capital to cover their positions, then for us... it's a good thing."
As major short-selling institutions in the market.
No matter from which aspect they analyze, they naturally hope that the short-selling forces in the market, especially the major short-selling forces, are as strong as possible.
Because only then can their capital pressure be alleviated.
Only then can they avoid being squeezed by the major long-position institutions in the market to the point of running out of ammunition and supplies, forced to cover and close their positions, before the referendum day on the 23rd.
And just as they predicted...
At this moment in London, Barclays Investment Bank's Leon International Hedge Fund Trading Department.
As the fund manager of this major fund product, Claude had indeed decided to re-enter the market and massively short-sell the British Pound exchange rate after lengthy consideration.
And that massive short order just now was indeed his doing.
"Old friend, aren't you being a bit hasty with this decision?" Alex, the head of the market research department, who had been silent beside Claude, hesitated for a moment and asked, "When many domestic institutions are responding to the central bank's call to go all-in on long positions to maintain the stability of the British Pound exchange rate, our massive short-selling of the currency always feels a bit inappropriate."
Claude chuckled and said, "Do you think the central bank's plan to snipe short-selling capital has a chance of success? Do you think that group of Wall Street capitalists, fiercer than wolves, are really that easy to harvest, really lambs to be slaughtered in the market?"
"I certainly don't think so." Alex said, "I just feel that the current situation is still within a controllable range, and the government's influence on the referendum result on the 23rd is also still under control."
"It won't be that easy." Claude said, "I carefully reviewed the 'National Referendum on Brexit' motion approved by the Cabinet some time ago and found a lot to it. Many Cabinet members support Samond, and quite a few people... actually hope Samond can stir up trouble."
"That's impossible, isn't it?" Alex said subconsciously.
"And it's not just that." Claude said, "Just this morning, I heard that several people in the city government are connected to Samond, and these regions are all places where everyone currently expects a vote to remain in the EU. Coupled with Wall Street capital secretly meddling. I just have a feeling that this referendum will produce unexpected results.
Furthermore, the market's long expectations are now truly too consistent. Millions of net long positions, once a covering-induced stampede occurs, the consequences would be unimaginable."
"But short-selling one's own country..." Alex said, "Once we make a wrong trading move, we will face immense public opinion pressure, and this will bring extremely adverse effects to our institution's subsequent business development. Moreover... a decline in the British Pound exchange rate, or an extreme collapse, would be a considerable blow to our institution's currency reserves, foreign exchange business, and so on."
Claude said, "Other business directions are not my responsibility, and I can't care about that much. Since I am now the fund manager of this major fund product, Leon International, I must be responsible for this fund product. There's no reason to trade in the wrong direction."
"Alright!" Alex thought for a moment and then sighed softly.
He knew Claude was a rather stubborn person; once an investment decision was made, it wouldn't be changed.
Moreover, after carefully considering it, he also felt that the central bank's plan to snipe short-selling capital was not entirely reliable, and everyone's conviction that the referendum result on the 23rd would definitely be to remain in the EU also made him vaguely uneasy.
However, Barclays Investment Bank's switch from long to short.
As there was no fundamental change in market news, and global investors' general expectations still leaned towards the long direction, it failed to continuously suppress the bullish momentum on the market, nor did it crush the confidence of the bulls.
It was observed that after Barclays Investment Bank's Leon International major fund invested heavily to establish a large number of short positions, the British Pound exchange rate briefly fluctuated below the 1.5300 level, then surged back above the 1.5300 level, and in the late European trading session, once again reached a new intra-day high of 1.5360.
Furthermore, in another powerful counterattack by the bulls.
As time entered the early US trading session, the bulls, leveraging a magnificent short squeeze momentum, even pushed the British Pound exchange rate to an intra-day high of 1.5384 at one point.
Then, as the British Pound exchange rate approached the 1.5400 level.
After further comprehensive analysis of market news, sentiment, and capital flows, the major Wall Street short-selling capital decisively chose to continue increasing their short position chips, curbing the British Pound exchange rate's momentum to break above the 1.5400 level, and using vast capital and short positions, suppressed the British Pound exchange rate back to around the 1.5300 level.
"Why is the 1.5400 level so difficult to break through?"
Noticing that the British Pound exchange rate had fallen back again, a retail investor group going long around the 1.5350 level couldn't help but grumble.
"The news stimulus is still not enough; it's insufficient to cause a collapse in major short-sellers' confidence."
"Let alone causing a collapse in major short-sellers' confidence, it can't even put psychological pressure on them."
"If the 1.5400 level remains impenetrable, it feels like the British Pound exchange rate will next fall further, touching the platform support levels of 1.5200 and even 1.5100."
"To put it simply, despite the British Pound exchange rate's trend becoming increasingly fierce, it remains within a large volatile platform."
"Absolutely. Major short-selling institutions' positions in the market haven't significantly decreased. In this situation, a unilateral upward breakout for the British Pound exchange rate is basically impossible."
"Many intraday speculative traders in the market are already rapidly covering their positions."
"Right, long positions are rapidly shrinking, and the number of new short positions has begun to exceed the number of new long positions, indicating that many intraday long positions in the market are being closed."
"In a volatile market trend, if you don't close your positions, the profits you hold will just fall back."
"Why are so many of these large Wall Street institutions bearish?"
"Wall Street capital has always been major short-sellers in the forex market; there's nothing strange about that. Wasn't the continuous decline of the British Pound exchange rate in the past two years also dominated by these large institutional funds?"
"For the past few days, it's always dropped during the Asian and US trading sessions and risen during the European trading session, it's really bizarre."
"The British Pound exchange rate's volatile range is getting larger, which means the struggle between the bull and bear forces in the market is becoming more intense, right?"
Accompanied by countless retail investors' discussions on various major forex investment and speculation platforms.
As the US trading session continued.
The British Pound exchange rate continued its decline, driven by the closing and covering of intraday long positions and the increasing positions of Wall Street short-selling capital.
Ultimately, as the market approached the closing of the US trading session.
The British Pound exchange rate had almost erased all its intra-day gains, falling back to around the 1.5200 level.
(End of chapter)