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“Sterling getting Pounded,” is the heading of a new strategy note from Citi, in which analysts warn a sharp decline below 1.10 against the Dollar beckons.
Citi, the world’s largest prime broker of foreign exchange, says its technical strategy team is now looking to position for an extension of the long-running decline in the Pound to Dollar exchange rate (GBP/USD), by buying put options.
This is a strategy that delivers a profit when an exchange rate or any other financial asset falls.
“We are buying a 4 month 1.0770 GBPUSD put,” says Tom Fitzpatrick, a technical strategist at Citi, in a note seen by Pound Sterling Live.
“The long term GBPUSD chart now truly looks awful,” he says, offering a thesis for the trade.
But a fall to 1.0770 could be a relatively conservative forecast, as Fitzpatrick has studied GBP/USD’s long term charts and finds “a major double top forming as a continuation that suggests a move to…