Earlier today, in the very appropriate context of Greg Smith, we lamented the resent disappearance of everyone's favorite FX strategist, Thomas "9 out of 9" Stolper. Speak of the squid - here he is, this time advising clients they just got Stolpered out on short GBP/NOK with a 2.2% loss in 3 weeks.
On 22 February 2012 we recommended going short GBP versus the NOK, partly on the assumption that Norges Bank would have little room to cut rates after recent data showed very strong growth momentum and much less disinflation than feared.
Having already cut by 50bp at the end of last year, we did not expect any additional easing.
In the event, Norges Bank did cut rates and hence removed the underlying rationale of the recommendation.
We close our short GBP/NOK for a potential loss of 2.6%, including carry.