May Might Miss March M(deadline):
Sat in the pursuit of a synonym for ‘deadline’ that begins with the letter ‘M’ all for the sake of alliteration, it’s easy to let the tumultuous world of Brexit pass you by. Foreign exchange markets seem just as carefree unable to displace the Pound more than 0.01% since market open this morning! There were residual signs of swelling risk. In the options market, high demand for risk reversals saw Sterling’s implied volatility fall for contracts with a late-March expiry whilst call options appreciated in value relative to put options, suggesting Sterling upside rather than downside is the fear. In the Sterling spot market, a sudden and short-lived rally through 1.13 was observed as headlines erroneously hinted towards a delay in the Brexit deadline. When the government lost last night’s vote on the Brexit deal, Sterling spiked upwards. The reason that traders and analysts have attributed to the appreciation is that the defeat left May’s deal so dead in the water that it was inconceivable, what with the decreasing probability of a no-deal Brexit, that the UK could leave by March 29th, therefore inviting a softer and more thorough Brexit. Today’s continued rally stands as testimony to this view. However, last night’s rally following a day of losses undeniably represents a liquidation of short covering and positioning moving into the vote. With the vote of no confidence tonight, we’re in for another evening of salience and turbulence. Hold onto your hats!
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Gold
Humphrey Percy
Mon 24 Mar 2025
Gold Another week and another high for Gold at $3045. It’s not just the fear factor that leads investors to buy Gold, it’s the Central Bank buying in a bid to diversify away from USD. In the past 3 years, that buying has amounted to over 1000 tons led by China and India, but also other […]
Daily Brief – Uncertainty and GBP
Humphrey Percy
Fri 21 Mar 2025
Uncertainty and GBP This is the word that dominates market thinking at present. No surprise that like the US Federal Reserve, the Bank of England left UK interest rates unchanged with that uncertainty overshadowing all markets plus the expectation of UK inflation rising from its current 3% rather than falling to the target of 2%. […]
Daily Brief – OECD
Humphrey Percy
Wed 19 Mar 2025
OECD The Organisation for Economic Co-operation and Development slashed their forecast for 2025 EU growth this week from 1.3% to 1.0%. Germany with slated growth of just 0.4% down from 0.7% was described with a rare touch of OECD humour as the weakest link. While better described as the prime culprit, the effect of flaccid […]
