TRADE INSTRUMENT: GBP/USD SPOT
In the last few months I have been advocating to sell GBPUSD if it has found any strength. In the last month, the mighty Pound has advanced significantly against the $USD not due to the strength of the Pound but merely from $USD weakness. This week is going to be cracker for all Sterling traders as the “geysers “on Westminster seem to have spared Teresa May some blushes in the short term, however as I have said before the fundamentals in the UK do not warrant a firmer Pound. The UK Economy has been battered in the last 18 months and seems to be on the receiving end from its European cousins. The Brexit deal which seems to be going nowhere will determine the future of the Pound in the short to medium term. There is no cheap divorce and the UK will learn that lesson very quickly.
My trade is to go short GBPUSD, some currency fundi’s out there might feel you will get more bang for your buck by going long EURGBP, that could be an alternative trade. Stay short Sterling cause “fish and chips” will be a bit more expensive this week.
Source: Bloomberg 2017
Source: Bloomberg 2017
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