The Brexit Time Bomb continues to have its disruptive effect in the GBP Pound that Plummets to 8-Week Low. What will happen in the next days is critical as markets cannot see who is leading the Brexit war and its possible effects not only in the British economy but also in the EU and its possible domino effect.
Brexit Time Bomb GBP Pound Plummets to 8-Week Low.
As the political spectre becomes more and more divisive and various polls suggest that momentum is growing for the super critical vote on June 23 for Britain to remain or leave the EU. This is spurring high profile concerns about a prolonged stretch of volatile uncertainty that all economists damage economic growth and trigger losses in financial markets. Recently the stocks have slumped, Japan’s yen has surged and bond yields have tumbled to fresh lows in a broad flight to safety.
This monday’s biggest losses were in Asia, where major stock indexes dropped 3.2% in Shanghai and 3.5% in Japan. In the U.S., the S&P 500 dropped 0.8% and the yield on the 10-year U.S. Treasury note slumped to 1.616%, its lowest since December 2012 (sourse WSJ).
From the various scenarios all analyst conclude that
A ‘Brexit’ will cause mayhem in the markets with the Pound already in high volatility:
What are the big risks?
So how can you prepare as a trader?
What are the Potential buying opportunities?
Saxo Bank, Head of Markets Claus Nielsen has recently reported in an interview with Leaprate that:
It has been important for us to take prudent measures to reduce our clients’ risk and to be fully transparent and inform clients about the changes well in advance of the UK EU referendum. Saxo Bank’s vision to democratize trading comes with responsibility. This responsibility manifests itself in providing broad market access to create as level a playing field for as many investors and traders as possible.
Saxo Bank in addition to the new margin requirements, has launched a number of initiatives including a UK EU Referendum webpage to support its trading clients both in the run-up to and following the event.
Another player currency analysis from Paresh Davdra, the CEO and Co-Founder of RationalFX has also reflected on the subject:
“Brexit continues to dominate the news and play havoc with the volatility of the pound, with numerous polls this weekend suggesting that the ‘Leave’ campaign has taken a lead. Whether these polls are accurate is irrelevant at least in currency terms, with investor confidence in the UK remaining in Europe being sufficiently dented as to see the pound drop immediately – falling to its weakest point since mid-April.
The turmoil that we are seeing in the build-up to the Brexit vote suggests that the day after the referendum – the 24th – will be a day of extremes for the pound, whatever the outcome of the vote. If Britain votes to stay in the EU, I would expect the pound to spike to its highest level this year. If Britain were to vote out, all signs suggest a massive and immediate drop in the pound – in all likelihood sinking to its lowest point of the 21stcentury.’’
To finish I guess Monty Python on Brexit is a good sense of humor in this scenario.
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