Wednesday, June 22, 2016

According to the markets the results are in: Bremain wins!

The Brexit vote is coming up tomorrow, but it seems like the (currency) markets have already made up their mind: Britain remains in the EU! I personally have no opinion regarding this matter since I'm not British, and no matter what happens it won't really affect me. Therefore I'm not biased, but I have noticed a strange pattern regarding the GBP/USD chart I'd like to share.

Unfortunately this 'strange' trend all started with the tragic murder of Jo Cox on June 16 (blue arrow on chart), before that the GBP was tumbling over Brexit fears, that was because the Brexit voters had the upper hand. It actually showed somewhat of a downtrend. I even wrote a little article about it not long ago. But ever since, the GBP/USD has been gaining quite a lot of strength. As of right now, to my knowledge the Brexit/Bremain vote is neck and neck, but it looks like the markets are quite confident that a Brexit is not going to happen as we can see on the chart below.

The blue arrow indicates the day of the tragic murder of Jo Cox.

Why is that? Do banks and other major financial institutions know something that I don't? It's almost like the final results are already in and the average joe doesn't know about it. If it was indeed a neck and neck situation the markets would trade sideways on the day of the murder of Jo Cox, right? Or did people who were previously in the Brexit camp gone to the Bremain side because of the murder? I've been trading the GBP/USD and other major currencies for quite awhile now, but this scenario is simply bizarre. If anyone knows what's going on with this currency pair, please feel free to leave a comment. I'm going to follow the Brexit and the GBP/USD closely in the upcoming days. Right now I'm not making any trades due to extreme volatility in this pair.

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