USD/JPY, EUR/USD, GBP/USD: 3 Takeaways On Directions - SocGen

Societe Generale Cross Asset Strategy Research discusses 3 takeaways on the direction of USD/JPY, EUR/USD, and GBP/USD:

"1) there’s still room for USD/JPY to rise now, and EUR/JPY and CAD/JPY to rise later; 2) EUR/USD is correcting, and while it is doing so frustratingly slowly, it can go a bit further; and 3) GBP/USD is stretched. ‘Bumping along the bottom’ isn’t a sexy description of what the GBP is set to do in the months ahead, but that doesn’t stop it from being accurate," SocGen argues. 

"If we believe that EUR/USD faces no more than a correction en route towards reaching ‘fair value’ in a 1.20-1.30 range in 2018, a return to GBP/USD 1.40 is much more likely than a return to 1.25, however dismal our view of the UK’s prospects. Throw in the possibility – however remote – of the decision to leave the EU being revisited, and there’s suddenly a big skew to the upside in terms of the possible GBP/USD level over the next couple of years," SocGen adds.

In line with this view, SocGen initiated a medium-dated bullish GBP/USD option trade idea on the ground that buying 'the cheap GBP' via options is attractive here.

Source: Societe Generale Cross Asset Research