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GBP Set To Stabilise Short Term, Still Weaker Medium Term

Published 10/07/2016, 07:10 AM
Updated 05/14/2017, 06:45 AM

EUR/GBP temporarily overshot our 6M forecast at 0.92 and GBP/USD dropped to a 31-year low overnight in what is likely to have been an algorithmic trading-driven flash crash.

EUR/GBP is technically overbought and we see a high risk of a moderate correction lower in the short term.

Fundamentally, we remain bullish on EUR/GBP. We still target 0.92 in 6M but stress that risks are skewed towards the cross overshooting our forecast in the coming three to nine months.

Tactically, we will look for opportunities to buy EUR/GBP in the event of a correction lower and we recommend EUR- and DKK-based corporates and real money funds to maintain a high hedge ratio when hedging GBP assets/income.

To read the entire report Please click on the pdf File Below

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