Thursday, July 7, 2011

J.P.Morgan: trading advices concerning ECB meeting

The market is sure that the European Central Bank will raise its benchmark rate on Thursday, July 7. It’s also pretty clear that the Bank of England will keep the borrowing costs unchanged at its meeting on the same day.

The surprises are unlikely. Never the less, analysts at J.P. Morgan think that it’s still possible to trade on this event. In their view, it’s necessary to concentrate attention on the tone of the central banks’ statements.

The specialists expect the ECB President Jean-Claude Trichet to sound hawkish, while the Bank of England is likely to remain dovish. The natural conclusion from such assumption is the recommendation to buy EUR/GBP. J.P. Morgan advises to open longs at 0.8960 stopping below 0.8870 and targeting 0.9200.

Chart. H4 EUR/GBP

h4 eurgbp 17-11

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