GBP: Still prefer to look for selling opportunities
I’ve been chopped around in recent weeks on the short GBP play but I still feel that the short side offers better risk-reward opportunities. The price action from late last week suggests to me that even if we do get a Brexit deal this week, the rally in GBP will be ‘limited’, ie between 1%-2%.
Will Brexit be orderly, acrimonious or delayed? We should know more this week. Can Boris even take the UK out without a deal? He says yes but the UK parliament has previously and unequivocally said he cannot. Then what happens? A no-confidence vote, a new interim PM, a possible second referendum? Plenty of permutations and combinations of possibilities.
If we do get a no-deal situation then the GBP is likely to fall pretty hard, possibly 5%+.
I’m not running any positions at the moment but will wait for extreme spikes or sudden momentum moves before getting in to the market.