Are we done with the Brexit noise range?
Back in September last year I put forward that 0.8735-0.9050 Brexit noise range, of which the latest February update here and how I played it.
We had 3 outside tries now on the (relatively) positive deals and Transition period news for the UK re Brexit, quickly met by rebounds as the EU doesn’t give a free ride and peacock fights are continuing on both side of the Chunnel, despite some agreements. Note we never had a daily close below the 0.8735, so we can argue the range is still intact.
The GBP is showing good resilience of late though, which keeps me from going long EURGBP at the bottom of the range again. I even played it short for a while as the TP looks written in stone and UK data are rather supportive. Today we expect some EU group news as EU officials were hinting yesterday at a decision on the Brexit Deal this afternoon.
So the question for now is: Deal or no deal? We’ve been saying enough times on FFL we think it may go to the wire but a deal will be reached.
There’s still a lot of water to flow under the Thames’ bridges before sticky trade deals will be negotiated and 2 other questions remain:1. Will the UK get the green light to start negotiating trade deals outside the UK within the Transition Period and 2. How will these deals compare to the present within the EU framework?
As the market tends to anticipate and at the same time forget there may be some sticky points in the future, I am ready to see a shift in the range change.
On the dailies we can see FEB and May 2017 lows around 0.8400 with one break below down to 0.8314, but for the similarity of current range it’s
a little easier (who said that ??) to take the roughly 3 big figures width. So that’ll be what I’m watching for the rest of this week. I’m not saying we break and if we close the week above 0.8735 it’ll even strengthen the range but if we do get a break, which will be marked by a renewed move sub 0.8700 imo, I’m ready to assume we’ll be entering a new range 0.84-0.8735.
As usual d(r)ive safely and happy hunting
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