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#1 27-06-2016 09:29:38

johnedward
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From: Paris - France
Registered: 21-12-2009
Posts: 3594
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GBP and EUR: Morgan Stanley's forecast for this week (27 June)

GBP and EUR: Morgan Stanley's forecast for this week (27 June)


http://www.forex-central.net/forum/userimages/morganstanley.gif


EUR: The next JPY. Neutral view.

After the Brexit vote, the EUR's drop was not very strong, supporting our view that the single currency could remain solid under all scenarios. European rates are already very low and should no longer drop much, which supports the EUR. In addition, the current account surplus will also keep the EUR from falling.

GBP: Selling offers a good risk/return ratio. Bearish view.

We think the GBP/USD could continue its decline towards 1.25 due to Brexit. The UK needs foreign investment to finance its 7% GDP current account deficit. For foreign investors to be attracted after the Brexit vote, the GBP should depreciate for UK assets to be cheaper, or these assets must offer a high yield. But it seems that the price depretiation will do the job. Thus, we believe that the risk/return ratio for the sale of the GBP against the JPY, EUR and USD is attractive at current levels.


"Anything worth having is worth going for - all the way." - J.R. Ewing

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