Is it time to buy EDU6 against Selling L U6?

The Short Sterling Strip has rallied back towards its pre Payroll highs on the back of soothing comments and assurances from Mark Carney.  Below the orange line represents the close last night vs. 1, 2 and 3 months ago.
[Click images to enlarge]

In the meantime, the surprisingly strong October Payroll data coupled with increasingly hawkish Fed rhetoric has put the probability of the first hike at approx. 66% for December.  The debate will now transform to the pace and terminal level of the hiking cycle.

This has caused a reasonable repricing in rate expectation differential between the two economies.  Below is a chart of Sep-16.

The spread has moved from an October low of -10 to the current level of +10.5.

In the meantime, the rolldown to the Jun-16 contract is 16 ticks for Eurodollars, whilst it is only 11 for Short Sterling, i.e a 5 tick pick up over three months.

For those who believe the U.K. recovery/inflation outlook is more robust than Mr Carney’s current guidance, this doesn’t look like a bad way to play it.