Monday, June 13, 2016

Brexit fears pound the pound

I've always wanted to do a title with a word play like this! It wasn't on my bucket list or anything, but still, the perfect opportunity has come! In all seriousness, the possible Brexit would have a major impact on the GBP currency. That's because the polls now show that a majority of Britons prefers to exit the EU. On June 23 it's the final vote, but before that there is a lot of anxiety in the currency market. Already a lot of money has left the UK. Scenarios like this always creates trading opportunities due to high volatility, and in this case a good fx play. 

My trading setup would begin around 1.41, anything below would signal an even further drop towards 1.40 and below, anything above 1.42 and there may be an upward trend. Regardless I'm keeping a close eye on the psychological level of 1.41. When a Brexit indeed does happen, we can expect to see an even much lower GBP/USD, perhaps even as low as 1.25 in the short term. I'm usually a cautious fx trader, but in this case I'd risk a 30 pip SL in either direction.

We'll see what happens.

Disclaimer:

All opinions expressed, trade recommendations/advice on this website are solely of John van der Munnik and are not affiliated with any investment firm or any other organization. You should not make an investment only based using this website VDM Trading for your trading needs without seeking help from your own financial advisor.