MUFG trade of the week: Stay short GBP/USD
Where next for cable?
Analysts at MUFG have doubled down on a trade recommendation made previously in selling GBP/USD from 1.3690 (spot 1.3725) with a target of 1.32 and a stop at 1.3950.
It's been interesting that all of today's rate hiking talk couldn't provide any kind of lift.
"We are maintaining a short cable trade idea. We are not convinced that recent GBP gains will be sustained against the USD," they write.
"We expect the combination of slowing global growth and higher inflation resulting from more persistent supply chain problems to prove more challenging for risk assets and high beta currencies such as the GBP," MUFG adds.
On Friday, MUFG also doubled down on a short AUD/CAD trade wit ha target of 0.8850 and a stop at 0.9350. That trade is based on policy divergence.
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