At least the clocks went forward this weekend. The Brexit process – not so much. We have less than two weeks before we are due to leave. Today a raft of options will be tabled followed by a debate then votes on the options will be held later this evening. Sounds familiar. Will there ever be a majority for the way forward or will have Theresa May’s deal through at the fourth time of asking or will we leave without a deal? We’ll know in the next 12 days. Perhaps.
Sterling has become almost immune to the ebbs and flow of Brexit news. Cable (Sterling/Dollar) has traded from around 1.30-1.33 and Sterling/Euro from around 1.1550-1.1750 recently. However, Sterling may soon either trade significantly lower or significantly higher. If none of the options being voted on this evening get a majority then expect Sterling, technically speaking, to get a good kicking. We may see it fall a few percentage points this evening or rally higher. If our politicians cannot agree on one of the endless options being tabled then the Prime Minister will go again for the fourth time of asking and say “Well, if you can’t agree on anything then it’s either my deal or it’s no deal”. Again, this is all speculative. Sadly, no-one really knows how this is going to end.
The one thing you can guarantee is that if April 12th is the day we are going to leave then Sterling is going to react more aggressively in the next 10 trading sessions.
You can view the recent movements on Cable (Sterling/Dollar) and Sterling/Euro on the graphs below
If you have a requirement to purchase USD from Sterling then consider purchasing a percentage of your overall exposure on SPOT or a short dated Forward Contract out till end of April. It gives you some downside protection should the UK leave without a deal. Please contact the trading department for rates of exchange and to discuss margin requirements over the next few weeks. Also, consider implementing take profit orders to take advantage of any upside moves on commentary.
If you need to sell Dollars consider staggering take profit orders to the downside to take advantage of any intraday movements or any sustained directional move on the back of Brexit related news. Please contact the trading department to discuss levels. In terms of news flow for USD this week, ISM Non-Manufacturing (PMI) (Mar) and Non-farm Payrolls (Mar) are the key releases.
In terms of Sterling/Euro, we’re trading in no-mans land at present with a neutral bias. We’re extremely light on Eurozone data releases this week although of course Brexit commentary from European officials will impact GBP/EUR. If you would like to discuss a strategy for your individual requirements for GBP/EUR over the coming weeks please do get in touch with our trading department. They will be able to provide you with expected technical levels and work out a plan that works best for you and ultimately mitigates your currency risk.
If you have any questions on anything please do let me know.
Have a fantastic week.
Written by Liam Alexander