Currency investors should consider establishing GBP/USD short positions around current levels. The trade of the week from MUFG is to sell cable with a spot reference of 1.1100, a target of 1.0450 and a stop at 1.0450.
“We are adding a new short cable trade idea and maintaining a short NOK/CHF trade idea. We established [a cable short] trade last week and hit our profit target far quicker than we anticipated. We have since rebounded of course on the back of the intervention by the BOE to bring order to the Gilts market,” they write.
“Confidence remains fragile and based on the signs of limited desire for any U-turn, we suspect GBP/USD will begin to decline once more.”
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