GBPUSD Unsure, But Brexit Votes Edges Closer to No Deal
With all of the indicative votes failing in the House of Commons and PM May's deal looking increasingly unlikely to pass, the UK is now in serious jeopardy of an accidental crash out of the EU. The price of the pound does not reflect this pact and incredibly the historic 10-day volatility of the pound has dropped back down to relatively normal levels. I am still neutral to short (officially neutral) and there are several reasons why:
1) The UK still has two weeks for the House of Commons to come together and get a deal done.
2) May's vote could still pass the House of Commons.
3) May giving herself up to fall on her Brexit sword to get her deal passed indicates that is not willing to trade a no deal Brexit for her and the Conservative Party to maintain in power.
Beyond these silver linings though, there are many more reasons to either stay neutral:
1) The sheer diversity of outcomes that could occur before April 12 is incredible including no deal, one of the many different versions of a deal, May's deal, a general election, May resigning, a renegotiation of the deal, another referendum, or a vote of no confidence.
2) Some of these are more possible than others, but the scale of the options creates extreme uncertainty.
3) Because of the uncertainty, trades beyond two weeks could be dramatically hit from a move in the opposite direction as a no deal would probably lead to a massive loss while a deal would result in a massive gain.
There are even more reasons to be short. Those I will get into as time develops though since my view is increasing moving from neutral/short to short. More to come. If you would like to see some additional analysis, please check out www.anthonylaurence.wordpress.com
1) The UK still has two weeks for the House of Commons to come together and get a deal done.
2) May's vote could still pass the House of Commons.
3) May giving herself up to fall on her Brexit sword to get her deal passed indicates that is not willing to trade a no deal Brexit for her and the Conservative Party to maintain in power.
Beyond these silver linings though, there are many more reasons to either stay neutral:
1) The sheer diversity of outcomes that could occur before April 12 is incredible including no deal, one of the many different versions of a deal, May's deal, a general election, May resigning, a renegotiation of the deal, another referendum, or a vote of no confidence.
2) Some of these are more possible than others, but the scale of the options creates extreme uncertainty.
3) Because of the uncertainty, trades beyond two weeks could be dramatically hit from a move in the opposite direction as a no deal would probably lead to a massive loss while a deal would result in a massive gain.
There are even more reasons to be short. Those I will get into as time develops though since my view is increasing moving from neutral/short to short. More to come. If you would like to see some additional analysis, please check out www.anthonylaurence.wordpress.com
