Hedging sterling/dollar is best option
REAL-LIFE PROBLEMS, INNOVATIVE SOLUTIONS
BACKGROUND
The recent strength of sterling has caught many UK hedgers off-guard, with GBP/USD recovering rapidly throughout 2006 and now approaching the highs achieved at the end of 2004. Indeed, the sterling weakening trend of 2005 (in hindsight now appearing very much as just a corrective pullback) seems to have lured many UK hedgers into a false sense of security. With sterling now taking the lead among the majors we expect further out performance by sterling (against the dollar in particular)
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