8 May 2015
EUR/GBP put spread to cover August BoE – Nomura
FXStreet (Barcelona) - FX Strategists at Nomura, suggest a derivatives based strategy to position for the restart of GBP outperformance.
Key Quotes
“GBP was trading strongly against EUR until just recently, but EUR/GBP has been trading strongly since mid-last week. EUR short positions have been broadly squeezed, while bonds have sold off globally.”
“EUR/GBP short positions may also be unwound ahead of today’s UK election, which remains highly uncertain. In the short term, these two factors could send EUR/GBP further higher, but on a three-month time horizon, we expect EUR/GBP to trade more in line with economic fundamentals, which still suggest a gradual EUR/GBP depreciation is more likely.”
“We have been looking for a good entry point for EUR/GBP short positions, and the recent EUR appreciation provides a good entry point for mid-term EUR/GBP short exposure.”
“We recommend entering a 3- month EUR/GBP put spread expiring on 7 August.”
Key Quotes
“GBP was trading strongly against EUR until just recently, but EUR/GBP has been trading strongly since mid-last week. EUR short positions have been broadly squeezed, while bonds have sold off globally.”
“EUR/GBP short positions may also be unwound ahead of today’s UK election, which remains highly uncertain. In the short term, these two factors could send EUR/GBP further higher, but on a three-month time horizon, we expect EUR/GBP to trade more in line with economic fundamentals, which still suggest a gradual EUR/GBP depreciation is more likely.”
“We have been looking for a good entry point for EUR/GBP short positions, and the recent EUR appreciation provides a good entry point for mid-term EUR/GBP short exposure.”
“We recommend entering a 3- month EUR/GBP put spread expiring on 7 August.”