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EURO/POUND €1.336

While investors and central bankers wonder what will happen to the greenback, the outlook for sterling is pretty gloomy too. Britain’s economy is showing clear sings of a slowdown, and, albeit less than the US, it has borrowed a lot from abroad to finance its spending. All this does not bode well for the currency. While the Bank of England may have to wait for a while before kicking off some interest rate-cutting action, with high energy and wholesale prices, the cuts will arrive sooner or later and the pound will suffer. This will be particularly against the euro, which could come of age as a new safe-haven currency, especially as the European Central Bank doesn’t intend touching the cost of borrowing. Expect sterling to fall against the Euro, says Angus Campbell, head of sales at Capital Spreads. He adds that it could weaken against the dollar as well, with the UK economy set to slow and interest rates set to come down. We go short but place a looser stop loss to avoid being stopped out by a technical bounce.

ACTION: SELL €/£ • Target price €1.2 • Stop loss €1.43

TIME TARGET: 6 WEEKS