Brexit to Continue Causing Issues

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  • Parliament elects to “punt”
  • Continual political chaos
  • Ongoing concerns about Northern Ireland

Brexit continues to cause major issues: the UK Parliament has decided to push for an extension of the process while the European Union hasn’t stated whether or not it will offer that extension. In other words, the United Kingdom may not have a choice but to leave on October 31. Granted, there is an enormous amount of economic damage that can be had by the EU if the UK leaves suddenly and without a deal, so one would have to believe that the EU will probably grant that extension.


this means we will have more nonsense when it comes to trading the British pound going forward


Unfortunately, this means we will have more nonsense when it comes to trading the British pound going forward. While recently the British pound has rallied against most other currencies in the hope that there will be some type of an agreement, the market has been thrown all over the place for the last three years, and it will probably continue to see that happen. Traders are starting to assume that something is going to be worked out, as the British pound has gained 1000 pips over the last two weeks against the Japanese yen and 800 against the US dollar.

Major danger

British pound traders have gotten so bullish over the last couple of weeks that things are now suddenly parabolic. Unfortunately, this could be reversed quite quickly with the wrong headline. If the EU refuses an extension, it’s very likely that the British pound will get absolutely hammered at that point. However, if they do continue to work things out, it’s likely that there will at least be more hope going forward. Hope seems to be the only thing driving the British pound right now.

One of the biggest dangers will be the contention over the Northern Ireland border regarding whether or not it will have to deal with the EU customs union and how it will be handled. There have been multiple proposals, but the reality is that the situation has not been settled. It also seems as if Parliament will continue with its own agendas.

There have been talks about a potential snap election, but it needs two-thirds of Parliament to vote for it. This is something they are not willing to do at the moment, as far too many members are worried about losing their own seat.

Caution

There will be plenty of headlines coming out across Twitter, newsfeeds, and all over the Internet that will continue to trick algorithms into buying and selling the British pound. Because of this, the British pound will continue to be one of the more dangerous assets to be involved in going forward, as the markets will continue to try to guess what happens next. Unfortunately, that is the market that we are in right now, as the British pound has been so volatile.

Beyond that, it has also driven a lot of money into precious metals and other such assets as well. This is a global issue that looks likely to continue for at least a few more months.

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