Euro Cross Pick 05.26.09

[B]My picks:[/B] Flat EUR/GBP - Look for Break Out/Range
[B]Expertise:[/B] Fundamentals and Technicals
[B]Average Time Frame of Trades:[/B] 2- 10 Days

The fall in the EUR/GBP last week failed to trigger the buy entry I placed at 0.8880, the 4/27 low, and the pair may continue to trend lower over the near-term as investors raise long-term expectations for higher interest rates in the U.K. At the same time, mounting fears for financial institutions in Germany paired with a weakening outlook for growth and inflation could lead the exchange rate lower as market participants anticipate the European Central Bank to take further steps to shore up the economy, and as a result, I decided to wait for further confirmation before committing to a trade. I will keep a close eye on the euro-pound for a break below its current range, which could lead the pair to retrace the advance from last year however, if the pair fails to break below 0.8637, the yearly low, I will continue to range-trade the pair as investors weigh the outlook for future policy.