Formal Brexit: one event – dozens of widely differing opinions

Formal Brexit: one event – dozens of widely differing opinions

Article 50 trigger – formal notification of Britain’s intentions to leave the European Union – is a story of the day. The Article will be invoked at 14:30 MT time. Market analysts offer various trading tips.  But it’s for you to choose the most suitable one.

Some market strategists recommend not to rush into trade against the sterling and not to join the crowd of short sellers. This cohort of economists argues that prediction of GBP drop to 1.10 against the USD are designed to fill the space in the headlines. There are not based on the economic reality. A move downside is well priced in, so, as long as prices remain above the recent lows, the risk of bullish reversal is still in place.  The act of Article 50 invocation could be one of those “sell the rumor, buy the fact event, that has a potential to send the pound towards 1.3000 area. Some of them say that the main focus will be not on the event itself, but on the comments accompanying the letter. The more details on future talks we get, the more confident we will be in our projections for the future path of the sterling (as additional information will partially eliminate uncertainty surrounding the future relationships between the UK and the EU27).

Another group of market analysts disagrees with their colleagues saying that it is not a proper time to become bullish on the pound. This is a so-called “crowd” for the analysts from the first group.

The third group is the group of “Machiavellian foxes” as I dubbed them. They prefer staying in the trenches until the dust settles down and only then rush into trading. They are intended to hold off for an hour or two allowing the market to digest the information, and then ride the established trend in the New York and Asian trading sessions. 

gbp

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