Fxwirepro Short Term Outlook: Euro to Decline 700 Pips Against Pound

Fxwirepro Short Term Outlook: Euro to Decline 700 Pips Against Pound

20 May 2016, 15:54
Roberto Jacobs
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Fxwirepro Short Term Outlook: Euro to Decline 700 Pips Against Pound

Pound has been showing remarkable resilience against Dollar as well as other currency pairs, especially Euro, which makes the pair, EUR/GBP an attractive short. While analysts have focused around the effect on Sterling, in the event of an exit from the Union and not much over Euro, so far.

We, at FxWirePro, have repeatedly warned that Euro is at risk too. If UK exits from the union, damages to the United Kingdom is in the short to medium term, whereas European Union and Euro Zone will suffer in the medium to long term. An exit of Britain will officially mark the beginning of tearing up of European Union, where Eurosceptic populists are already on the rise.

If UK, thrives outside European Union, which is not an impossible possibility, many will choose to follow the path. Many countries are already planning their own negotiations after Britain inside the Union. We will even go this far in saying, a German exit from the single monetary union is as possible as Greek exit. Germany is clearly losing its influence in European Union and seen by many as oppressor.

Poll shows, people of European member countries have more favorable view of Britain than Germany and after being battered by payments, refugees there is a strong possibility Euro skeptics in Germany will gain lots of grounds in next year’s election.

While market has largely priced options in tune of an exit case, Euro has remained relatively buoyant against Pound until recently. After reaching above 0.81, the pair has started moving south and we expect it to continue to do so and reach as low as 0.7 over the coming months.

A British stay will definitely make it very easy to reach the recommended levels.

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