Pound a Buy Against Euro: Westpac
PoundSterlingLIVE – Strategists at Westpac look for the Euro to fall further against the .
According to a new strategy note from the bank, it remains prudent to position for further declines in the Euro-Pound exchange rate as the pair looks intent on respecting a well-understood range and fundamental developments align in Sterling’s favour.
“We maintain our short,” says a note detailing the strategy that looked to sell the exchange rate at 0.8698. (A Pound to Euro equivalent of buying at approximately 1.15).
Notably, this level forms the topside of a well-formed range in EUR/GBP that has been in place since May:
The premise behind the trade remains intact, according to Westpac in a note released on October 11:
1) the dovish recalibration in BoE rate hike pricing has run its course; and
2) Eurozone peripheral financial stability risks are building as the region barrels toward another unedifying episode around fiscal finances, with Italy and France projecting uncomfortably large deficits as the focus returns to the EU’s deficit rules.
The next significant event risks posed to the Pound-Euro conversion include Bank of England Governor Andrew Bailey who speaks on 13 and 15 October, UK jobs/wages (17 Oct), UK Sep CPI (18 Oct), and Eurozone final September CPI (18 Oct).
The trade targets a move to 0.85, which gives a upside target of approximately 1.1765.
An original version of this article can be viewed at Pound Sterling Live
