Euro Sellers Should Lock in These Levels: Citi
- Written by: Gary Howes
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Image © BruceG1001 @ Flickr, reproduced under CC licensing.
For those selling euros and buying pounds, Citibank's currency trading desk has some advice, telling its clients to lock in the recent gains in EUR/GBP and "anticipates a gradual move lower."
"Recent economic developments (UK robust performance vs German slowdown) should continue to indicate downside," says a note from Citi, released Thursday.
That said, traders at the bank acknowledge much of this negative outlook is already priced and for a more significant move lower, be on the lookout for a close below 0.8383.
"A break below 0.8383 would open up further downside towards support in the 0.8200-0.8250 range," says Citi. For those watching Pound-Euro, this equates to a move higher to 1.21-1.22.
The Euro to Pound exchange rate spiked higher to 0.86200 in early August amidst a global equity market selloff and following a Bank of England rate cut.
Above: EUR/GBP at daily intervals.
The strength of the move suggested Pound Sterling's solid run against the Euro might have ended. But the UK currency then staged a strong recovery over the remainder of the month, returning the market back to pre-Bank of England levels.
But stability above the key 0.84 mark confirms this is acting as a significant source of support that can frustrate EUR/GBP sellers.
