12 May 2015
EUR/GBP might move lower to test 0.70 – Westpac
FXStreet (Barcelona) - The Westpac Team notes that risk for EUR/GBP have flipped and the pair might now make a move lower to test 0.70 levels.
Key Quotes
“Macro: EUR/GBP has slid sharply after the decisive victory by the Conservatives but it has only unwound the election uncertainty premium built in just ahead of the election. Moreover, with Grexit risk on the rise GBP may benefit from some late safe haven flow.”
“Bottom line EUR/GBP risks have flipped and wouldn't be surprised to see the pair test 0.70 in the next week or two.”
“Model: Despite the decisive conservative victory in the UK elections the model's stance on GBP is unchanged, our suite of signals still biased to run small shorts in GBP (-5% of the portfolio). Even though our growth signal is bullish GBP the lack of yield and a poor current account momentum signal are bigger negatives as far as our model is concerned.”
“Technical: Medium term momentum failure at the April low launched the break above 1.5150/70 resistance and an impulsive rally. Momentum is positive across time frames. Recent close above 1.5550 targets multi-week upside.”
Key Quotes
“Macro: EUR/GBP has slid sharply after the decisive victory by the Conservatives but it has only unwound the election uncertainty premium built in just ahead of the election. Moreover, with Grexit risk on the rise GBP may benefit from some late safe haven flow.”
“Bottom line EUR/GBP risks have flipped and wouldn't be surprised to see the pair test 0.70 in the next week or two.”
“Model: Despite the decisive conservative victory in the UK elections the model's stance on GBP is unchanged, our suite of signals still biased to run small shorts in GBP (-5% of the portfolio). Even though our growth signal is bullish GBP the lack of yield and a poor current account momentum signal are bigger negatives as far as our model is concerned.”
“Technical: Medium term momentum failure at the April low launched the break above 1.5150/70 resistance and an impulsive rally. Momentum is positive across time frames. Recent close above 1.5550 targets multi-week upside.”