### POV: EUR/GBP SET TO BREAK OUT.....>

EURO-STERLING: ### POV: EUR/GBP SET TO BREAK OUT OF RECENT TIGHT RANGE: ITALIAN

ELECTIONS COULD BE THE CATALYST

-In early 2018, both 1 and 3m EUR/GBP implied volatility hit the lowest levels

since 2014. With little event risk or expected central bank activity, this was

understandable and, despite the dollar diving, EUR/GBP has traded within a tight

2% range (vs. 5.5% in GBP/USD, 2.7% in EUR/JPY).

-In the 37 months since Jan 1st 2015, EUR/GBP has only traded in a tighter range

on four occasions and implied volatility gauges are suggesting this drought of

EUR/GBP volatility could be coming to an end.

-Implied volatility measures are all beginning to turn north, but it's the

1-month implied vol levels that have seen the most impressive uptick as it

begins to price in Italian elections due to take place on March 4th.

-Technically, the 100DMA (Gbp0.8853) is poised to break below the 200DMA

(Gbp0.8852) which will add to the bear case after the 50DMA fell below the

200DMA on Jan25. If confirmed, this could suggest the next breakout in EUR/GBP

will be a leg lower.