There is a strong trend in place and we believe that it may continue in future. On the macroeconomic point the BoE is committed to a strong expansionary monetary policy and the new president claiming that inflation target may notbe the only goal of the bank with more focus on the economic output. The FED is printing money as well but the recovering economic fundamentals of the US economy coupled with growing concern inside FED board about risks of an excessive monetary easing, are pushing the USD up. Moreover, the USD and the GBP have had similar sensitivities to the risk-on/risk-off mood so this trade would be hedged against a shift in such

sentiment. On a technical point of view, the analysis of the ATM implied volatility 1 month maturity pointed out that the current level (9.03) is at the 96.01 percentile of the annual distribution of the value so it is really high compared to its historical level. Therefore, assuming that the inverse

relationship between the IVOL and the level of the currency hold, we believe that the bearish trend can continue. Finally looking at the chart we see that the price has just broken an important resistance level at 1.5335. We believe that this level is important because since the start of the deepest phase of the European debt crisis (summer 2011), it has never been broken so it is

representative of the mood of the investors in the current market conditions. With regard to the risk management we set the stop-loss at 1.56 and the take-profit levels are the following for a one week time horizon: 1.46-1.475 for the aggressive investor and 1.483- 1.49 for the moderate investor. For the 3 week time horizon (that is the maximum period we can forecast with accuracy) we suggest 1.39-1.415. Be aware that at 1.40 there is an important resistance level.


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