CashBackForex
CashBackForex Representative
- Messages
- 5
Today, Thursday 25 July, we get the UK GDP Quarterly and the yearly numbers. It is expected the GDP grew in the last quarter at 0.6% up from the previous estimate of 0.3%. For the yearly comparison, the estimate is up 1.4%, an improvement from the previous increase of 0.3%.
If these numbers play out as forecast, it appears the British economy is much stronger than the EU. This should mean the pound will outperform the euro, but there are other things to consider. For the last month, the euro had gained over 200 pips on the pound, from under .85 to over .87. While the British economy has been growing, the EU has been rewarded because there were no major problems, not because they had found solutions to existing problems.
Looking at the recent COT Report, there may be another reason to buy the pound and sell the euro. That report shows the specs are big shorts in both the euro, 65.5K contracts versus 61K in the pound. But the euro with 283K contracts open is a much larger contract than the pound with only 175K open, so the spec has a bigger short percentage in the pound.
Finally, would you rather own UK 10-year gilts yielding 2.39% or the German bunds at 1.64%?
We think that the EURGBP (FXE FXP) has a chance of once again trading under 85. Again, please manage your money safely.
If these numbers play out as forecast, it appears the British economy is much stronger than the EU. This should mean the pound will outperform the euro, but there are other things to consider. For the last month, the euro had gained over 200 pips on the pound, from under .85 to over .87. While the British economy has been growing, the EU has been rewarded because there were no major problems, not because they had found solutions to existing problems.
Looking at the recent COT Report, there may be another reason to buy the pound and sell the euro. That report shows the specs are big shorts in both the euro, 65.5K contracts versus 61K in the pound. But the euro with 283K contracts open is a much larger contract than the pound with only 175K open, so the spec has a bigger short percentage in the pound.
Finally, would you rather own UK 10-year gilts yielding 2.39% or the German bunds at 1.64%?
We think that the EURGBP (FXE FXP) has a chance of once again trading under 85. Again, please manage your money safely.
