Not quite so contradictory as it sounds and is a strategy I use quite happily/successfully
Barclays Capital weekly client note courtesy of efxnews.com
Investors following tactical strategies should consider selling EUR/GBP this week and also looking to sell GBP/USD on upticks,
“We expect the UK economy to grow modestly into the year-end and think that the market is pricing in too much dovishness from the MPC, pricing out the possibility of a hike until Q3 15. We prefer to express our GBP constructive view against the EUR, rather than the USD, as we expect the ECB to ease further but the Fed to stay firmly on a policy normalization path,”
“We are bearish on the GBPUSD and would use upticks as an opportunity to sell at better levels. Our initial downside target is at the recent range lows near 1.5945. Below there would confirm further downside towards greater targets near 1.5850 and then the 1.5720 area,”
In term of data, the focus will be on the GBP with the release of CPI (Tuesday) and the employment report (Wednesday).
“The market expectation for a BoE hike has retreated lately, as the data flow has been on the softer side lately , and it now suggests no tightening until Q3 15. We expect price and labor market data this week to confirm continuing improvement in labor market conditions, with well-contained near-term inflationary pressure, broadly in line with the consensus,” Barclays projects.
“We think the market is pricing in too much dovishness from the MPC and prefer to express our constructive view on the UK economy and the GBP via shorting EURGBP, rather than GBPUSD,
