Short Sterling – June 2010

Nicole Elliott from Mizuho Corporate Bank at 01/14/10

Comment: Interesting that now the world and his mother is resolutely anti-Gilts, calendar spreads in the Short Sterling futures contracts are narrowing. Very good volume last week, as contracts set new record highs, suggest many have been wrong-footed. Expect more of the same as the time element drops out as we approach delivery and hopes for economic recovery either fade or are pushed back in time again, and again. Here the Ichimoku ‘cloud’ led to an upside break from ‘triangle’ consolidation and the measured target is 99.320.

Strategy: Buy at 99.160, adding to 99.080; stop below 99.000. First target 99.220, then 99.300/99.350.