EGP: Short-Term Downside Risks

The Egyptian pound continues to trend lower, confirming our expectation that the unit would exhibit further weakness in the short term, primarily on the back of euro strength. The pound broke through our key support level of EGP5.50/US$ on March 24 and has since been tracing below resistance at EGP5.50/US$, falling to EGP5.51/US$ on the day of writing (April 7). Further losses in the coming days could foreshadow a move to the EGP5.60/US$ territory, a break through which would prompt us to suspend our longer-term bullish view.

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