Market mood EUR/GBP: Strong EUR, weak GBP [Video]
|Listen to the latest market mood for the EURGBP pair.
Strong EUR, Weak GBP
The GBP continues to look vulnerable medium term as the UK has still not arranged a trade deal with the EU. EU’s Chief Brexit Negotiator Barnier warned that British negotiators will not be able to insulate London from the impact of Brexit. Over 100 UK company heads have recently warned PM Johnson of the huge damage to the UK economy if Britain exits the EU without a trade agreement.
By contrast, Europe has falling COVID-19 cases and a huge spending PEPP programme of over €1 trillion alongside a proposed Recovery Fund to support the most struggling EU members like Italy. This should keep the EUR supported.
Therefore, expect EURGBP buyers on pullbacks medium term.
Swing trade outlook – We expect this trade to play out over the next 2 weeks. However, the trade will remain valid for as long as its underlying factors remain valid.
Trade Risks
If we see a swift rise in European COVID-19 cases that will also invalidate this outlook.
If we see the ‘frugal four’ (Austria, Denmark, Netherlands, and Sweden) reject the recovery fund this will drag the EUR down.
Entry/Exit Guide
Entry: 0.6561 buy on stop
Stop loss: 0.6551
Target: 0.6000
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