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Oct 19 - 02:55 PM

GBP/USD: Market Participants' Confidence Over A Trade Deal Will Be Severely Tested; Staying Short - MUFG

By eFXdata  —  Oct 19 - 01:30 PM

MUFG Research maintains a tactical bearish bias on GBP/USD, expressing that via holding a short GBP/USD as its ToTW targeting a move towards 1.2630.

"The lack of pound movement is somewhat surprising considering that Brexit trade negotiations have deteriorated following last week’s EU Summit. After a lack of progress in trade talks, UK Prime Minister Boris Johnson warned on Friday that the trade negotiations are “over”, and the EU should “only come to us if there is some fundamental change of approach”," MUFG notes.

"In the meantime, we expect market participants’ confidence over a trade deal will be more severely tested. We added a short cable trade idea to reflect downside risks to the pound should trade talks fail to progress as time quickly runs out to reach a deal. The risk of political miscalculation still exists even if it is in both sides interests to reach a deal," MUFG adds. 

Source:
MUFG Research/Market Commentary

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