hedgeman

Could the Pound Sterling Be the Canary In the Coal Mine?

GBPUSD is a strong buy on daily close above 1.4930. We intend to open an agressive position. We are bearish on DX and EURGBP is out of line according to our analisys. Since interest rates between Eurozone and UK converged basically, 2009 could be a year when EUR adoption becomes a topic for UK again. And in our view Eurozone could not "survive" such terms of trade ("fair value" fix - also in political context would be in the 0.83 - 0.87 area for EURGBP).

Disclosure: Long JPY ag EUR and USD, short EURCHF, short DX, long GC.