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GBP about to hit some headwind

By   || October 21, 2009 at 21:19 GMT
|| 12 comments || Add comment

I booked a small loss on my EUR/USD shorts overnight and I also booked profits on my GBP/JPY long position as we have reached the 50% retracement of the 163/139.70 fall and this is a level which Japanese traders usually seem to respect. I’m also hearing reports of some very solid offers in the cable between 1.6630/60 from Sovereign names and big Middle East trading accounts. If cable breaks above all these offers then it must really be headed higher.

Good luck today.

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Category: All, Asia, Mkt Talk
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12 Responses to “GBP about to hit some headwind”

  1. Anne Marie on October 21st, 2009 21:33 GMT

    Hi Sean – How do you think this information will affect the EURGBP pair? I believe it would sell but not as deeply as GBPUSD.

  2. Sean Lee on October 21st, 2009 21:37 GMT

    Hi Anne-Marie, I’m a bit conflicted on EUR/GBP in that I am personally quite bearish and feel we should see .85 again but my info from the market is that some of the bigger players are still buying. In the short run, I would say EUR/GBP probably goes a bit higher especially that EUR/USD is now above 1.50 and cable is about to meet some heavy selling interest.

  3. Anne Marie on October 21st, 2009 21:38 GMT

    Thank you for your insight, Sean :)

  4. Saferanger on October 21st, 2009 21:43 GMT

    Hey Sean, good to read from you! ; ) Thx for the comment on cable, already sold a tiny portion @ 1.6625. Was quite surprised it went up so far at all…but it is all based around chronical USD-weakness, isn´t it?

  5. Sean Lee on October 21st, 2009 22:04 GMT

    Well I think what we are seeing in the last week or so with sterling is positional readjustment. The market was uncomfortably short across the board.

  6. Sean Lee on October 21st, 2009 22:13 GMT

    Also Saferanger, the sell orders 1.6630/60 are significant in size I believe- a few hundred every 10 pips that I have heard about. If they get taken out then the market must still be quite short.

  7. Saferanger on October 21st, 2009 22:18 GMT

    Yeah, that was definetly overdone, and the market is getting uncomfortably long EUR I believe…what do you make of the comments that GBP is the only currency which is cheap for US-Investors to “diversify” into? Constantly high future volumes point into the direction of US-diversification…

  8. Sean Lee on October 21st, 2009 22:21 GMT

    Thats also a fair point and the GBP is the most logical ccy for US investors to consider as a hedge from a political/cultural standpoint. I don’t think thats a good reason to be buying at 1.66+ though.

  9. Saferanger on October 21st, 2009 22:21 GMT

    Well, I have 2 hearts beating in my chest here, as I am still long GBP/CAD, so a further rise in cable would be beneficial for that I guess…

  10. Saferanger on October 21st, 2009 22:23 GMT

    The diversification has been going on since and below 1.60 I believe, according to the futures

  11. MattG on October 21st, 2009 23:44 GMT

    I reestablished a short position in GBP/USD, didnt understand the the magnitude of the move higher in GBP/usd so I am limiting risk. It seems to be capitulation within some macro portfolios who are short risk assets and specifically GBP crosses.

  12. Sean Lee on October 22nd, 2009 00:25 GMT

    Good luck Matt, I like the trade but I’d suggest that above 16680 it looks dangerous again.

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