FxWirePro: Long term outlook – Euro could rise another 800 points against Pound

Since 2013, expectations of monetary policy divergence has pushed Euro lower against Pound from 0.87 area to as low as 0.69. 2013/14 was a time, when Bank of England (BOE) was expected to move first ahead of FED in hiking rates and 2014/15 was all about European Central Bank's (ECB) massive easing, which moved the pair lower towards 0.69.

But now in 2015/16, scenario has changed a lot fundamentally, BOE is not expected to follow FED any time soon, with inflation staying near zero. UK economy is cooling down and Pound has fallen to lowest in five years against Dollar. Moreover biggest risk or uncertainty in 2016 is possibility of Britain exiting from European Union. If such is to happen, Pound has lot more downside potential. On the other hand growth recovery in Euro Zone has been solid only glitch is lowflation. Even if ECB choose to increment current pace of purchase of assets, big bazooka is unlikely.

With such fundamental view, Euro could gain much against Pound going ahead and retrace back its loss from 2013.

Trade idea -

Buy Euro against pound at current price 0.763 and at dips, with stop loss around 0.7 area and target around 0.84 area.