Thursday, 10 June 2010

Looking at sudden weaknesses in EUR/GBP as buying opportunities


EUR/USD is finding some traction in trading in Europe with a rally back to 1.2085 at the time of writing. As suggested here last week I would expect this rally to eventually test 1.22 but I would expect substantial renewed selling pressure to emerge at this level.

My preferred play at present would be to buy EUR/GBP on any abrupt weaknesses and expect a rally towards the level indicated on the chart below. Sterling is now facing more pressure - at least in the near term - until the details of the UK budget are announced and until Fitch, and the other credit rating agencies, have weighed in with further concerns about the troubled state of the UK public finances.

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