BAML: Trade Recommendation to sell EURGBP, supported by FX Quant Trader analysis:
Entry level: .8590
Stop loss: .8655
Target: .8355 (first target)
Stick with the hot hand in BofAML’s Quant trader. EURGBP is back to multi year highs and shows possible RSI divergence. GBP positioning is mega short and BOE rate cut hopes can only drive near term price so far.
Quant trader: The uptrend in EUR/GBP is about to correct lower, according to our positioning model. The Residual Skew and Up-Down vol flash red suggesting the uptrend is forming a short-term top. Rising Residual Skew indicator suggests a lack of conviction in the uptrend by the options market. Similarly, Up-Down post-Brexit has started to show greater volatility against the trend – bearish down moves when the spot falls.