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UK budget - How will FX markets react?
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Tomorrow's UK budget could help Sterling strengthen against the euro, as the eurozone QE programme dominates the trade. With the FOMC also due this week it's a fascinating week in Cable. Steve Lucas from 3cAnalysis provides his thoughts on the forex market before the budget number crunching begins.
Steve is calling for continued strength in Sterling, saying the currency will “strengthen against the countries that are going to cut rates or have been cutting rates, and weaken probably against the US Dollar”. Those currencies set to weaken include: CHF, EUR, AUD, and NZD. The dollar index however, has risen 24% amongst most of its counterparts since May. Given the strength in USD Steve is looking to sell a rally in GBPUSD at USD 1.4890 with a target price of USD 1.4520. A stop can be placed at USD 1.5038.
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