Dissecting the "Hard" Brexit shock in Sterling
Updated
This part of the Brexit leg is easier to track in Sterling, as FTSE continues enjoying the news of no hikes and more QE guaranteed till the Brexit finish line.
From a Political perspective:
=> The odds of T.May remaining as prime minister are diminishing by the minute. The latest immigration scandal has her fingerprints all over the trail, not sure she will survive this one.
=> Sajid Javid the Euroskeptic has just been appointed as Home Secretary. This increases further the odds of a Harder Brexit as Sajid has been clearly in favour of leaving the customs union.
From a Fundamental perspective:
=> Macro numbers are very very soft in almost all sectors and continue to disappoint. The latest GDP read was atrocious and
=> Inflation flopping again which is sending loud messages to the BOE that even hikes wont save this one.
From a Technical perspective:
=> We have been stuck in the wide Brexit range [1.50xx - 1.19xx] with the avalanche now starting to form after showing exhaustion at the widely watched 78.6% of the Brexit move so far.
=> The only level in play here is 1.371x which unlocks the bottom of the wide range towards our targets of 1.27 and 1.21.
=> Expecting a fast move towards 1.33 from here which will finish the current leg up, followed by a pullback towards the 1.371x to mark the top, and then down we go.
From a Political perspective:
=> The odds of T.May remaining as prime minister are diminishing by the minute. The latest immigration scandal has her fingerprints all over the trail, not sure she will survive this one.
=> Sajid Javid the Euroskeptic has just been appointed as Home Secretary. This increases further the odds of a Harder Brexit as Sajid has been clearly in favour of leaving the customs union.
From a Fundamental perspective:
=> Macro numbers are very very soft in almost all sectors and continue to disappoint. The latest GDP read was atrocious and
=> Inflation flopping again which is sending loud messages to the BOE that even hikes wont save this one.
From a Technical perspective:
=> We have been stuck in the wide Brexit range [1.50xx - 1.19xx] with the avalanche now starting to form after showing exhaustion at the widely watched 78.6% of the Brexit move so far.
=> The only level in play here is 1.371x which unlocks the bottom of the wide range towards our targets of 1.27 and 1.21.
=> Expecting a fast move towards 1.33 from here which will finish the current leg up, followed by a pullback towards the 1.371x to mark the top, and then down we go.
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