Sterling and the phantom menace – EUR/GBP will rally in 2007
MARKET VOICE
Sterling benefited from several factors in 2006 – reserve diversification, positive M&A flows and higher interest rates. This has seen EUR/GBP pulled from pillar to post, with little overall trend in the latter part of 2006. We favour EUR/GBP upside in 2007, and investigate sterling seasonality for the year-end and the New Year implications for this trade into 2007.
For some time, there has been strong sentiment surrounding sterling's seasonality. In years gone by, it has been noted that, as the
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