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Oct 05 - 09:55 AM

GBP/USD, EUR/GBP: 'Days Of Reckoning Beckon'; What's The Trade? - Credit Suisse

By eFXdata  —  Oct 05 - 08:30 AM

Credit Suisse likes fading GBP strength in the first half of October via selling GBP/USD close to 1.30 and buying EUR/GBP below 0.91.

"For now, GBP is holding its own while trade talks with the EU are ongoing, given the ever-present chance of a breakthrough. Especially as option markets suggest that risk premia are already priced into the GBP options curve, specifically in the 2-3m GBP tenors where “no deal” economic impacts start to be felt," CS notes. 

"But we still believe underlying UK economic fragility and the risk of a final show down with the EU means GBP levels approaching 1.30 in GBPUSD and below 0.91 in EURGBP should be faded in the first half of October," CS adds. 

Source:
Credit Suisse Research/Market Commentary

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