We already reported on this two days ago when we pointed out the painfully obvious that the EURGBP was imploding, but Goldman's FX strategist decided to keep the muppets in a losing position a little longer just so their losses would be even greater. Or who knows why. Whatever the reason, Stolper is now officially out of his woefully mistimed EURGBP trade reco, which has returned -2.8% unlevered in one week. Apply, oh.... 10x leverage and it becomes obvious why Goldman's clients love it so very much.
Trade Update: Stopped out of long EUR/GBP on increasing Cyprus tensions
We opened a long EUR/GBP recommendation based on the idea that further Sterling weakness is likely given the prospect of additional monetary easing and the increasingly weak external position. Since then BoE Governor King has signalled less desire for a weaker currency and the increased Eurozone tensions linked to the Cypriot bail-out package have pushed the EUR lower. Our views on Sterling have not changed but more EUR weakness is possible in the near term and will depend on the Eurozone news flow.
We close the recommendation for a potential loss of 2.8%.
As a reminder, this is what we said a week ago when we reported on the trade initiation:
"the logical Stolper-contrarians in us say this is precisely the time to fade the relentless move higher in the EURGBP: history is on our side about 93% of the time. After all, Goldman's prop flow desk is now selling the pair to its clients. This is even as we said to short the GBP with both hands and feet in late November when Carney's appointment was announced: a move that has resulted in nearly a +1400 pip gain in the GBPUSD short. Oh well, time to take profits."
Please keep 'em coming Tom.