With Parliament now closed until the 14th of October, the amount of Westminster-related volatility should dry up as politicians make their way back to their second homes or various holiday destinations. Unfortunately, with it also evaporates more of the no-deal aversion positivity as the market corrects itself and traders begin to close profitable sterling trades.
In essence, since most of the volatile and tradable news has passed, the market will move the no-deal fear into next year as provided for by the Benn-Burt bill, which requires the PM to request an extension until then if no deal is reached in the meantime.
Despite this, uncertainty in the pound is still very much alive and well; as provided for by general election fears – especially if Jeremy Corbyn’s Labour party begin to make inroads in the polls – a possible European veto on an extension and poor data releases on the health of the economy.
Technically speaking, the pound has struggled to get past 1.1200 on the euro and 1.2375 on the dollar, as sellers flood into the market to take profit while they can. As the amount of news dries up, so do the number of pound buyers, as reflected in the reduced flow in sterling trades globally this week.
In short, anything above 1.1100 on GBPEUR and 1.2275 on GBPUSD at the moment would represent a victory for sterling transfers. If you’d have asked any trader if that was likely in the market a week ago, you would have probably received some very funny looks – Westminster has finally dealt sterling a good hand and most clients are now profiting from that.
Have a great day.