Where to now for GBP?
You know the market is admittedly clueless about sterling's future direction when the experts themselves are saying: "it could go 1% up or 1% down" or, to hear an answer worded in the following manner: “If the Withdrawal Agreement is accepted…., then we will see ….and if it is rejected, then….”. I highlighted in last week's chart that implied option volatility on GBPUSD for appears excessively supressed, considering the sharp descent in spot GBPUSD. Those who are bearish GBP will tell you the market is being complacent and volatility is underpricing the risk of heightened political uncertainty (PM May having to leave and allowing a leadership vacuum behind her). Those who are bullish or neutral GBP will explain the relatively low volatility by either indicating that it's too early, referring to the vote in two weeks' time. Others would stated that a smooth Brexit is inevitable.
So what do we think? Will Theresa May wait for the outcome of Thursday's European Elections to map her strategy for the Withdrawal Agreement vote the following vote? How about technicals? We currently have two existing trades on GBP for the Premium Insights. On Friday, I added an update to Friday's trading update with three charts and notes (also in Arabic) to lay out the case for the trades. Our record in the Premium Insights for the GBPUSD has been improving, with 11 out of 19 trades closed at a profit over the last two years (since May 2017).
NOTE: UK CPI on Wednesday, EU Elections on Thursday, UK retail sales on Friday
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