Talking Points: RBNZ and BoE may be the first to normalize monetary policies Be prepared to sell EUR/GBP on lower highs Look for further AUD/NZD selling opportunities in 2014 Keeping up with the 2013 forecast , the bearish trend for the EURGBP and the AUDNZD should continue to take shape in 2014 amid the deviation in the policy outlook. It looks as though it will be a race between the Bank of England (BoE) and the Reserve Bank of New Zealand (RBNZ) as to who will be the first to start normalizing monetary policy, while the European Central Bank (ECB) and the Reserve Bank of Australia (RBA) may have little choice but to further embark on their easing cycle amid the growing threat for deflation. EURGBP Daily Even though the EURGBP is a slower-burning trade, the long-term outlook remains tilted to the downside, as it retains the bearish trend dating back to 2009. However, a steeper decline appears to be take shape, as Mark Carney's BoE moves away from the easing cycle. With that said, we will continue to look for a series of lower highs to sell the EURGBP, and the pair remains poised to face a pronounced decline in 2014, as the ECB prepares to implement more non-standard measures in the coming months. AUDNZD Daily The bearish trends in the AUDNZD should present more selling opportunities in 2014, and we will look to 'sell bounces' in the aussie - kiwi , as the pair looks poised to mark fresh lows next year. The 2008 low (1.0616) will be a key focus, as the AUDNZD clears the 78.6% Fibonacci retracement (1.1140-50) from the 2005 low (1.0428) to the 2011 high (1.3794), but we may see fresh record-lows over the medium-term, as the RBNZ adopts an increasingly hawkish tone for monetary policy.
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