Historic Brexit vote defeat sees pound regain days losses
As Prime Minster Theresa May loses Brexit vote by 230 points Chris Beauchamp looks at how to trade GBP/USD and GBP/EUR.
The futile gesture has been made, and the result is as expected. The fact that the pound has managed to hold its ground against the euro and the dollar shows what a foregone conclusion this was. It is odd, at this moment of national crisis, to see Parliament locked in stasis and the UK unable to see the way forward. Parliament isn’t giving way, the EU isn’t giving way, and nor, it seems is the Prime Minister.
It still looks as if ‘no deal’ is the least-likely option, and on this basis markets are happy to take a more optimistic view, although anything could still happen. But if the UK is going to exit it all, it now looks to be on the softest possible terms, something that will please investors and may even make UK assets a lot more attractive. But there is a lot of uncertainty to be removed first, and even a delay to Brexit until later in the year does not change this.
EUR/GBP continues to decline, and we should see this recover slightly tomorrow but the overall trend is down, and the drop through 89.50p seems to suggest that the way is clear to move back towards the lows of November, at 86.50p.
Against the dollar, the weighty rebound today puts the pound back on the front foot, and should see $1.30 challenged in due course. But this could be a volatile trip, and we should likely see further opportunities to buy the dip along the way.
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