Your Trade for a Sinking Pound

St George's Flag & Houses of Parliament
Peter Adams | Photodisc | Getty Images
St George's Flag & Houses of Parliament

Central banks have been easing, but this strategist thinks more is coming from across the pond.

From Norway to Brazil, central banks have been cutting interest rates. Andrew Busch, global currency and public policy strategist for BMO Capital, thinks Britain will follow suit.

"We've had all these central banks easing and the Fed has backed away from it, and the economic data supports them backing away from it," he says. But in Britain, "they still need to do more."

Busch notes a recent Financial Times article making a case for a long-term refinancing operation in Britain, and he thinks the British budget and Bank of England meeting minutes that will be released later this week will show weak economic growth.

So Busch has a plan. "I want to take advantage of the selloff in the dollar to sell the British pound on a rally," he told CNBC's Scott Wapner. But he wants to wait for a lift in the pound: "I think the market got itself way too long U.S. dollar, and everybody pulled back at the end of the week."

Once the pound rises, Busch wants to sell it against the dollar at 1.5925 with a stop at 1.6025, and look for a move to 1.5650.

Todd Gordon, co-head of research and trading at Aspen Trading Group, likes the trade - but he's cautious.

Busch "is playing the range," Gordon says, "which can be difficult."

Gordon agrees that the Monetary Policy Committee's meeting minutes could help the trade, "but keep your stops in place."

You can watch the discussion right here on the video.

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