FxWirePro: Buy euro against pound targeting 0.775

One of our forecasting models used for the long-term forecast is pointing to a bearish pound against the euro. Based on our calculations we expect the pound to decline against the euro to as low as 0.775 area. The pound is currently trading at 0.879 against the euro.

While some of our readers might doubt the call since the pound has been remarkable performer over the past couple of weeks. However, we would like to point out that while the pound has gained around 1800 pips against the dollar since March last year, it has risen just 350 pips against the euro, which indicates that much of the pound’s rally has to with dollar’s weakness than the pound’s strength.

We would also like to point out that while the market remains euphoric on the pound, there are extremely high risks surrounding it, Brexit backlash, domestic political trouble, tussle over Gibraltar with Spain, the threat of Scotland abandoning the UK to name a few. Only two factors are working in the pound’s favor at the moment; dollar’s weakness and Speculations over rate hikes from Bank of England (BoE).

For this more than 1200 pips trade, we recommend 520 pips stop loss around 0.93 area. We recommend selling EUR/GBP at the current rate of 0.879 and higher.