Review Question  

If you think that EUR is going to weaken against GBP, what position would you take?
  1. Long EUR and short GBP
  2. Short EUR and long GBP
  3. Long EUR
  4. Short GBP
Answer:
2 Correct. If you believe that EUR will weaken in the future, you should sell it now and repurchase it later at a lower price. Likewise, if you believe that GBP will strengthen in the future, you should purchase it now and sell it later at a higher price.
 

Summary

Mechanics of Spot Trading