By: Andrew Keene
The pound grew closer to two-week lows against the dollar as concerns over the European economic outlook and Fitch’s downgrade of U.K’s triple-A rating. The pound hit 1.5205 during European afternoon trade, the pair’s lowest since April 5; the pair subsequently consolidated at 1.5226. The pound remains under pressure as concerns over a recession and the prospect of more easing by the Bank of England. In light of weak growth performance of the U.K economy, Fitch’s rating agency downgraded the U.K’s triple-A rating to AA+. Official data showed that the U.K unemployment rate rose to 7.9% last month, from 7.8% in February. Meanwhile, the FXB ETF has been in a very steep downtrend from the beginning of this year. FXB lost around 6.56% in the first quarter of the fiscal year. GBP/USD remains bearish according to technical studies; indicators such as MACD, CCI and Momentum are bearish. The pound is likely to find support at 1.5098, the low of April 2 and resistance at 1.5311, Thursday’s high.
The Trade: Selling the June 152-153 Bear Call Spread for $.40 Credit
Risk: $60 per 1 lot
Reward: $40 per 1 lot
Breakeven: $152.40
Greeks of this Trade:
Delta: Short
Gamma: Short
Theta: Long
Vega: Short
I like this trade, because this is a neutral to bearish trade. I make money if the FXB moves lower, is flat, or up less than 1.2%