Back
7 Jan 2015
UK political uncertainty to be the theme for GBP in coming months – SG
FXStreet (Barcelona) - Kit Juckes of Societe Generale, prefers shorting GBP and EUR against the dollar, and suggests that the political uncertainty in UK will be the core theme for GBP in the coming months.
Key Quotes
“I still prefer shorts in GBP/USD to shorts in EUR/USD, as positioning is less of a challenge, weak UK economic data continue to surprise the market and the drag from political uncertainty will be a constant theme in the coming months.”
“As for EUR/USD, keep your stops close if you are short! The Euro has fallen further than I thought it would without any kind of bounce (more fool me), driven lower by Greek political uncertainty and the prospect of ‘bad QE' from the ECB, with credit risk-taking at a national rather than a Euro Area level. But even if ECB QE leaves a slightly sour after-taste, ‘bad QE' is probably better than ‘no QE'.“
“The acid test for that will come in the reaction of peripheral bond markets and equities, but if these don't fall further, Euro downside will be dependent on relative short-term rate moving against it, rather than simply a knee-jerk reaction to QE.”
Key Quotes
“I still prefer shorts in GBP/USD to shorts in EUR/USD, as positioning is less of a challenge, weak UK economic data continue to surprise the market and the drag from political uncertainty will be a constant theme in the coming months.”
“As for EUR/USD, keep your stops close if you are short! The Euro has fallen further than I thought it would without any kind of bounce (more fool me), driven lower by Greek political uncertainty and the prospect of ‘bad QE' from the ECB, with credit risk-taking at a national rather than a Euro Area level. But even if ECB QE leaves a slightly sour after-taste, ‘bad QE' is probably better than ‘no QE'.“
“The acid test for that will come in the reaction of peripheral bond markets and equities, but if these don't fall further, Euro downside will be dependent on relative short-term rate moving against it, rather than simply a knee-jerk reaction to QE.”