G10 – Buy GBP/USD: FXWW

From the FXWW Chatroom – The UK seems to be edging closer towards a Brexit deal as the EU seems prepared to make some concessions. One important consideration will be whether the UK will be allowed to decide itself when to pull away from what initially could be a ‘Norway’ style of relationship with the EU. Today’s speech by EU’s Barnier may provide more clarity. While the Brexit debate may dominate price action, the hawkish content of last week’s BoE inflation report and the expansionary budget could work as catalysts for additional GBP strength once markets are clearer on the potential Brexit outcome. GBP risk premium is likely to fall. The key risk to this trade is that Brexit negotiations become more uncertain, keeping GBP offered.

We like to buy GBP/USD at market with a target of 1.37 and stop of 1.2930.

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