GBP: Out-sized move in EUR/GBP – ING

We saw a huge move lower in EUR/GBP yesterday, ING’s FX analyst Chris Turner notes.

GBP/USD to trade down to the 1.3150 area

"Ex post, it could be seen as the UK having a better deal than the EU when it comes to trade. In reality, however, it was probably all to do with positioning, where opposing fiscal and monetary prospects between the eurozone and the UK had made long EUR/GBP one of the conviction trades this summer."

"That clear-out may have run its course and the fact that GBP/USD has now broken under 1.3370 support suggests sterling can sell off alongside the euro. There is a technical case now for GBP/USD to trade down to the 1.3150 area. That is our preference in a week where we think the event risks are skewed to the positive for the dollar."