"Governor, we must immediately increase the deployment of foreign exchange reserves in the market!"
At 5:30 PM Beijing time, within the Bank of England, during an emergency committee meeting, committee member Clement anxiously suggested to Bank of England Governor Brian.
"Indeed, the current situation is more severe than we previously anticipated," another committee member Horace also said at this moment. "This group of Wall Street capitalists are truly bloodthirsty wolves. These guys have been continuously selling the pound in various trading markets, deliberately creating panic selling and disguised bank runs among global financial institutions, multinational trading companies, and even individual investors regarding the pound, leading major banks involved in foreign exchange operations worldwide to begin restricting pound-related exchange services.
In such a situation, if we let it go unchecked and do not immediately increase the deployment of foreign exchange reserves, I'm afraid an even more severe pound bank run effect will occur. By then, with the added push from this group of Wall Street capital, the consequences would be even more unimaginable.
At the same time, the accumulation of long and short positions in the pound exchange rate trading market is also very large. Once the pound encounters more severe bank run selling in the global trade market, the fluctuations in the pound exchange rate trading market will also experience extreme situations. And once this situation occurs, it will be very difficult for us to reverse the decline."
Brian heard their words, glanced at the other committee members, and asked, "What do others think?"
The remaining committee members looked at each other, pondered for a moment, and then all raised their hands in agreement with Clement and Horace.
Brian nodded when he saw everyone had reached a consensus.
Immediately, he instructed the central bank's foreign exchange management department to further inject US dollar foreign exchange reserves into the market and to buy back a large amount of pounds being sold on the market.
"Good news, the Bank of England has finally made a stronger market intervention."
Just as the Bank of England increased its release of foreign exchange reserves into the market and further increased its long positions in the pound trading market, related news instantly spread to the market.
In Hong Kong, Jeremy, the market information collection specialist for the 'Huifeng Global Hedge Fund' trading department and also the head of the fund's market intelligence division, eagerly and happily reported to fund manager Godfrey.
"Is the news accurate?" Godfrey's eyes lit up as he eagerly asked.
Jeremy nodded and said, "The news just came in that the Bank of England's Monetary Policy Committee has unanimously decided to inject 10 billion US dollars in foreign exchange reserves into the global trading market within the day and to buy back an equivalent amount of pounds at the current market exchange rate."
"Great," Godfrey said happily, "10 billion US dollars within the day is a significant overshoot of expectations."
"However... besides this news, there's also some not-so-good bad news," Jeremy paused and continued, "According to market sources, 'UBS International' has begun to substantially reduce its long positions."
"UBS International's Andrea Hedge Fund?" Godfrey asked.
Jeremy continued to nod, responding, "Yes, it's UBS International's Andrea Hedge Fund."
"UBS International's Andrea Hedge Fund used to be the absolute dominant long-side institution in the pound exchange rate market," before Godfrey could speak, Ernest, the head of the market research department, visibly frowned, looking at the still fluctuating and declining pound exchange rate, wondering, "The Bank of England has already taken intervention measures beyond expectations, so why has this major hedge fund instead given up on continuing to go long and maintaining its long position investment strategy?"
"Could it be that... tomorrow's referendum result will have unexpected changes?" Gerald, the fund trading team leader, felt a bit uneasy at this moment, speculating.
"Impossible," although Godfrey couldn't immediately guess the motive behind 'UBS International Andrea Hedge Fund' reducing its long positions, he was certain that this major fund's motive for reducing positions was definitely not the factor Gerald speculated. "If the expectation for tomorrow's referendum result had indeed changed dramatically, then the Bank of England wouldn't be increasing its market intervention now. After all, if such intervention couldn't stabilize the pound's exchange rate, then the current actions taken by the Bank of England would be meaningless."
"The key now is... can the Bank of England's intervention truly curb the panic selling of the pound?" Gerald said, "I heard that in the black market, the pound's exchange rate has already fallen to around 1.46. In this situation, if Wall Street short capital further intensifies its selling of the pound and deliberately spreads panic about bank run selling, I'm afraid the 10 billion US dollars in foreign exchange reserves released by the Bank of England into the market will also find it difficult to reverse the decline!"
"Saving confidence is enough," Godfrey said. "As long as everyone expects tomorrow's referendum result to definitely lean towards remaining in the EU, and as long as everyone believes that the Bank of England's intervention in the market is releasing this expectation and strongly supporting the market, then the pound's exchange rate will definitely rebound from its current level."
"That's right," Ernest nodded, "In today's pound exchange rate market, confidence is more important than gold!"
"However..." Gerald hesitated for a moment and then continued, "At the current position of the pound exchange rate, our fund's overall long positions have already started to incur losses. Coupled with our heavy holdings, if the trend does not meet expectations, we will fall into a very passive situation, Mr. Godfrey... Do you think it's necessary for us to use the upcoming rebound in the pound exchange rate to cover and reduce positions to avoid potential extreme risks?"
Godfrey stated firmly, "No, as long as the pound market exchange rate doesn't break the 1.5000 point, it remains within our expected trend. In fact... looking at the market, all the news and trends haven't deviated from our previous predictions."
"If the pound exchange rate can rebound quickly at this level, it will be positive feedback on the news, and it will also confirm our speculation," Ernest also said. "What's more... when market sentiment and potential expectations lean towards the long side, Wall Street short capital manipulating the black market exchange rate and deliberately creating a panic of global investors selling off the pound will find it difficult to influence the pound's exchange rate for a long time.
As long as the Bank of England's market intervention stabilizes everyone's confidence, then the major core institutional players and smart money groups in the market, once they come to their senses, will instantly realize that this is merely panic created by Wall Street short capital, fearing they won't be able to exit safely after tomorrow's referendum results are out. It's just a dying struggle by the short capital in the market to exit."
"Will tomorrow's referendum result truly be without incident? Is it really certain that it will be to remain in the EU?" Amidst their discussion, Sato, the main fund manager of 'Mitsui Sumitomo Hong Kong Investment Company' which is affiliated with 'Huifeng Global Hedge Fund', also couldn't help but ask, "If this expectation is certain, then at this level, our institution will not reduce positions either, and we'll advance and retreat together with Mr. Godfrey."
Godfrey responded, "Mr. Sato can take a look at the preliminary vote counting results already released by UK government agencies. According to these preliminary results, the number of people in favor of remaining in the EU is approximately 55%, which essentially confirms a referendum result of remaining in the EU."
"If that's the case, then why haven't the short positions in the market decreased at all, but instead are rapidly increasing?" Hisaichi Yamamoto, a core trader in the main fund trading department of Mitsui Sumitomo Investment Company, asked in confusion, "Logically speaking... at this time, short positions in the market should sharply decrease, and the pound exchange rate should have already reacted to the expected results of tomorrow's referendum."
"With a group of Wall Street short capital intervening, the market trend will naturally deviate from expectations," Ernest responded. "But no matter how the short-term fluctuations of the market trend, the final breakthrough direction choice will definitely be consistent with everyone's expected direction."
"I checked, and in the preliminary vote counting results currently released by the UK government, there are still about one-third of the regions for which results haven't been released," Sato said. "What is the probability of an unexpected outcome from this one-third of the regions?"
Godfrey responded, "Almost none."
"Why do you say that?" Sato asked.
Godfrey continued to respond, "Of the one-third of regions that haven't released preliminary vote counting results, approximately two-thirds are relatively core regions of England, and only one-third are Scottish regions. Based on the preliminary voting results from other core regions, the relatively core areas of England have, without exception, leaned towards remaining in the EU. Therefore, there will certainly be no surprises in the overall referendum result."
Sato said, "So... as long as we weather Wall Street short capital's desperate counterattack tonight, the ultimate victory will be ours."
"I estimate that during the US trading session tonight, after Wall Street short capital institutions realize they cannot break through the 1.5000 point and cannot completely trigger a mutual stampede among the major long-side institutions in the market, they will definitely stop losses and close their positions on a large scale," Godfrey said. "Given the high probability of the referendum result, there shouldn't be many short capital institutions determined to gamble on the final outcome of the referendum."
"I hope so," Sato nodded.
He continued to ponder for a moment and finally gave up the idea and strategy of large-scale concentrated stop-loss and position reduction at this level, deciding to continue holding the large-scale short positions that were already in a state of floating loss.
At the same time, within 'Tianhe Capital', which was linked to the two major institutions.
Gu Chijiang, after listening to everyone's analysis and understanding the latest market news, also calmed himself down and abandoned the idea of reducing positions and stopping losses.
However, beside Gu Chijiang, Xie Hongxing, the 'Tianhe Capital' trading team manager who had been observing the changes in the pound exchange rate, always had worries and concerns in his heart.
However, his worries and the risks he analyzed did not receive enough attention in Gu Chijiang's mind compared to Godfrey's analytical views.
And as the three major institutions decided to continue holding their positions, insisting on seeing the final outcome of tomorrow's referendum, in the pound exchange rate market...
The pound's exchange rate trend actually unfolded as Godfrey had predicted.
After a brief period of volatile silence, influenced by the Bank of England's forceful market intervention and the news of a large-scale concentrated release of foreign exchange reserves, and as related positive news fully fermented.
Around 6:40 PM Beijing time.
The pound exchange rate once again drew a straight upward line on the trading chart, surging by over 80 points from around the 1.5120 level, successfully breaking above the 1.5200 point mark.
However, this surge, driven by positive news feedback, only lasted for one or two hours.
Then, around 8:00 PM Beijing time, which was the tail end of the European trading session, it once again fell into a volatile downward trend.
"Mr. Su, looking at the market trend of the pound exchange rate, the bulls seem to be somewhat powerless to turn the tide."
At this moment, in the main fund trading room of 'Huayi Chengyuan No. 1' at Huayi Capital Company, Qu Zecai, the trading team manager, saw the pound exchange rate rebound and then fall back into a volatile decline, a smile breaking out on his face.
Tonight was destined to be the most fierce night of struggle between bulls and bears in the pound exchange rate market.
Therefore, Su Yi, after a short nap in the afternoon and dinner, came back to the company, determined to fight late into the night.
At the same time, all trading groups in the trading room were also fully energized tonight, just waiting for this spectacular bull-bear battle to begin.
"It's a bit too early to say that now," Su Yi said with a smile. "After all, there are still a full 20 hours until tomorrow's referendum results are out. These 20 hours are precisely the trading period with the most frequent market news changes and the highest uncertainty. Anything can happen on the market."
"Mr. Su is right," responded Meng Shengfei, manager of Investment Department Two at 'Huayin International' Institutional Trading Center, affiliated with 'Huayi Capital', with a smile. "In these next 20 hours, many financial institutions, many investment institutions, and numerous retail investors and speculative funds participating in the pound exchange rate market will likely find it hard to sleep."
"It's not just investors and speculators in the financial market," said Kong Fansheng of 'Huayin International' Investment Department One at this moment. "It's estimated that UK government central bank agencies, cabinet ministers, members of both houses of parliament, vote counting agencies in various cities and regions... countless people whose interests are at stake will find it hard to sleep for these 20 hours."
"Mr. Su, are you still maintaining your previous judgment and forecast?" Frederick, from the trading department of 'Aberdeen Asset Evolution No. 1' Hedge Fund, asked with a smile, "If you want to change your strategy now, there's still time!"
Su Yi responded, "I still hold my previous view. Regardless of tomorrow's referendum result, with internal conflicts in the UK becoming increasingly prominent and the EU's economic recession becoming an unavoidable reality, the pound exchange rate has only one path: continuous depreciation. Therefore... I will not change my trading strategy, nor do I believe the Bank of England has the ability to turn the tide and reverse the situation. In fact... many Wall Street capitalists have long seen this."
"Mr. Su's courage is indeed admirable," Frederick said. "I also firmly believe this point."
"The market's net long positions, after the news of the Bank of England releasing foreign exchange reserves, had initially recovered slightly, but now... they've fallen back within the 500,000 lot range," Meng Shengfei said. "It seems that smart money in the market is increasing, and bulls closing positions and stopping losses are also increasing."
"The main reason is that the trend of continuous bank runs and selling of the pound by global financial institutions, investors, and numerous multinational trading companies has already formed, and this situation of bank run selling has not been reversed by the Bank of England's market intervention," Kong Fansheng said. "In fact, solely based on the market trend analysis of the pound exchange rate market, the long-side strength in the market still plays a dominant role, but unfortunately, the black market exchange rate has collapsed."
"The Bank of England's reaction was too slow," Frederick said. "They should have intervened strongly in the market much earlier, but unfortunately... Brian still hasn't learned from past historical lessons."
"If this situation of everyone panicking and selling the pound continues, won't the major long-side institutional groups in the market lose confidence by tomorrow morning?" Meng Shengfei said, "It feels like the current scene is very similar to the 'Swiss franc Black Swan' night last year."
"There are still differences," Su Yi said, "This market storm will be even bigger."
As the few people talked briefly.
The market trend of the pound exchange rate had once again fallen below the 1.5100 point mark.
At the same time, net long positions in the market rapidly plummeted to around 350,000 lots, while open short positions surged to nearly 5 million lots.
Also, at the same moment.
In London, across the ocean, Leeds, a core UK city that was not included in the first batch of preliminary voting results, released its preliminary vote counting results, which showed an unexpected and significant deviation from the statistical results generally predicted by major institutions and the widespread market expectations.
And before this significantly deviated result had officially spread.
Just as the pound exchange rate had fallen below the 1.5100 point mark, it once again plummeted in a straight line, continuing to flash crash by over 70 points, retreating with lightning speed to the 1.5000 point, the last psychological defense line for many long-side institutions in the market.
(End of chapter)