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Aug 08 - 01:24 PM
EUR/GBP: Sidelined N-Term But L-Term Investors Should Consider A Sell Above 0.8950 - Danske
First appeared on eFXplus on Aug 08 - 09:45 AM

Danske Research discusses EUR/GBP outlook and advises long-term investors to consider engaging in short exposure above 0.8950.

"GBP continues to trade on a weak note, and this morning, EUR/GBP has broken above the (now previous) year-to-day high at 0.8968.

While the increase in EUR/GBP yesterday can be attributed mainly to the increase in EUR/USD, our short-term financial model indicates that the risk premium on GBP might have increased further, with the cross now trading 0.8 standard deviation above the model’s short-term estimate of 0.8823.

For the longer-term investors, we still think a sell above 0.895 is attractive from a risk/reward perspective. However, given the past days’ weak performance in GBP, with GBP risk premium most likely on the rise, we maintain a more cautious tactical stance in the short term and stay sidelined for now.

Near term, the important technical levels to watch out for are 0.8982 in EUR/GBP," Dnakse advises. 

Source:
Danske Research/Market Commentary

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