Day four: potential EUR/GBP trade

Yesterday we saw good buying coming back into EUR/GBP at the 61.8% retracement of the 0.7874 to 0.7985 move. 

Source: Bloomberg

Following on from my trade idea yesterday, tensions in Europe continue to hold the EUR back, although it was modestly positive to see some buying occur in this cross, despite Mr Putin cutting some agriculture and food imports into Russia. NATO also gave a stark warning that Russia had around 20,000 combat troops on standby at the Ukraine border.

We also saw Italy fall back into a technical recession, its third in six years. So the fact EUR/GBP rallied seems testament to the fairly one-sided positioning I have made reference to this week.

At 21:45 we get the ECB meeting, although I would be paying far more attention to Mario Draghi’s press conference at 22:30. Given the low levels of inflation, it’s hard to believe Mr Draghi will be anything other than dovish.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.