Sterling markets remain much unchanged from Volume 77, thus confirming that the resumption of the long-term downtrend that is the Great British pound has taken place. One reason is that the fundamental landscape has remained extremely uncertain with the lingering threat of Article 50. Until there is more clarity as to how and when the British Parliament will trigger Article 50 and induce the Hard Brexit, the fundamentals continue to be bearish for sterling.
How should we trade the GBP this week?
Oil stole the show in 2015 as equities did 2 years before that. 2016 will be the year for sterling. The Old Lady has already stole the show this year with a Brexit vote that scared the entire world. I have Facebook friends who now buy and sell physical gold to hedge their portfolios. Of course, they don’t own stocks. Anti-establishment politics is popular around the globe but the market doesn’t like it at all. The lingering effect of the Brexit with the Article 50 caveat keeps the sterling market highly uncertain. And uncertain markets tend to fall. Whether they fall in a straight line or in a stair step lower, the net result remains the same – a Great British pound that is increasingly weaker than its counterparts.
With GBP trading at or near all-time low levels across the board, strangely the bulls will come out to cheer on every rally.
$GBPAUD GBPAUD No early jumping please . We have trend reversal channel. which i was expecting before its formation. PL
— Imran (@Wave__Trader) Sep. 27 at 03:03 AM
$GBPUSD – GBPUSD: UPDATES SETUP (FORECAST) – https://www.tradingview.com/chart/GBPUSD/sBGSWp2w-GBPUSD-UPDATES-SETUP-FORECAST/
— Stan Bokov (@tradingview) Sep. 27 at 04:20 AM
$GBPAUD flipped long side against double bottom, short term trade
— Francisco Portugal (@Ganchvs) Sep. 26 at 08:27 AM
Why all the exuberance? Don’t be a bottom fisher. Or at least don’t hold the knife for too long.
Full disclosure: Ok, so it is not really the Year of the Dragon. 2016 is the Year of the Monkey. But the $GBPJPY is nicknamed the “dragon” so it kind of fits. No? Ah well.