The free spending days of Gordon Brown have come to an abrupt stop and the new chancellor will announce a GBP6 billion package of spending cuts later today. This might have a short term positive impact for the pound as the market could interpret this as a new beginning for the UK economy.
EUR/GBP is close to the middle of its broad .8400/.8850 range and as such it’s difficult to feel confident holding any position. I prefer the long side of this trade but only when its on an .84 handle.
