Jump to content

What do people think is going to happen post Brexit vote?

Recommended Posts

I have a firm view that Brexit Remain vote will not change the fundamental picture in the financial markets or the wider global economy but may be a temporary catalyst for US large cap stock markets to make new all time highs (probably not the other markets thought, which will make strong retraces instead).  After that the end of the Bull market must surely come in.


On Commodities I think this scenario results in the end of the current retrace and a turn into a final move down to the bottom.


On FX I expect a fall off in DX corresponding to a surge in the Euro and GBP, with USDJPY completing the current move down as previously discussed and then USD goes on a large rally against all currencies, probably coinciding with a turn off the Stock markets all time highs.  Additionally I see an initial Euro relief rally against GBP followed by a strong Euro fall as the reaoity of the Eurozone economy and the precarious nature of the EU post Brexit vote hits home. 


I believe we will see a narrow Remain result, which will be too narrow to kill the issue (just like with the Scottish independence vote) and then we will see whether the Eurocrats are serious about real reform, which they are not and when people see that the issue will raise it head again, perhaps in somewhere like France with the people, emboldened by a close UK result, calling for their own referendum.  Surveys show the French people are more disenchanted with the EU than the Brits!  That one would probably go in the favour of exit and then the cats is truly among the pigeons...


Anyone else got a view?

Link to comment

Hy Mercury, if their was a remain vote, which looks like the markets are pricing that in already, it will most likely be a very narrow result, of which then without a shed of doubt their will be some turmoil in the conservative party. However in terms of reform in Europe, that to me seems more a joke and a dream and not to be taken seriously. If their was a remain, I don't think we are going to see a rally in indices or currencies as much as institutions are making out, simply due to uncertainty in the Eurozone and the US. Overall I still see USD-JPY falling lower, and GBP against the EURO to still fall regardless of the vote. The irony of course, is that Scotland is without a shed of doubt going to bring up the subject of the referendum for independence, if we vote leave, then I think to the contrary, regardless of what the SNP state.

Link to comment

It has been a very long time since I have seen such volatility in the market, and after staying up most of the night, we have seen interesting moves all across the board, however, it does seem that GBP-USD has slowed down, USD -JPY did go below 100Y, but soon went above 101 again, BOJ to make a press conference this morning. Now that we have left the EU, many of us have been saying, how Europe as a whole is standing up to the establishment, hence why I now would not doubt a win vote for Donald Trump in America. I do think now that the UK and the EU will no doubt will try to reassure the markets ASAP, and central bank chiefs will without doubt make statements sooner or later.

Overall a good victory for democracy, however as traders, this is going to require re-assessment across many major indices, commodities and currencies.

Link to comment

Reassessment  is needed on a continuous basis but this time it will take some time for the dust to settle.  Trading any time soon is a gamble in my view.  Logic would say that there will be a large reaction retrace but these times are not logical.


Longer term I think this may be the pin the pricks the bubbles but it will doubtless take a while for that to become apparent sufficiently to trade it.  The strange thing is that the markets are all going the way many of us have forecast long term, just happened over night, that is the crazy part.  One or two need another look (EURGBP for instance) now that is an overreaction.  The Euro FFX crosses may well be a decent trade soon as people wake up to what will not happen in the Eurozone.

Link to comment

Hy Mercury, although many have now suggested we could still see further falls in the pound, I myself a little sceptical about that. We have to start looking into the past and make some similar comparisons and therefore reach a logical conclusion, even though the markets are from logical right now. My View is that the euro dollar is the one that could take a pounding, as the rise in euroscepticism starts to unfold and therefore greater uncertainty in the Eurozone. Of course a credit downgrade could add to the increasing pressure on the pound itself, but that remains to be seen. The facts are we are not in a recession, the BOE has not intervened as of yet, and if you look at past history with the ERM, we all know that was not the most greatest of ideas even then. From a technical analysis view, looking at EUR-GBP, I do think we may have almost completed W5, therefore, unless it penetrates that tramline, I do think we may gain some strength. Let me know of course if you have a different view of this.

aud usd 2h.png

Link to comment


This topic is now archived and is closed to further replies.

  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 30/01/23 13:07
  • Posts

    • EUR/USD and EUR/GBP/USD appreciate while GBP/USD range trades Outlook on EUR/USD, EUR/GBP and GBP/USD ahead of this week’s Fed, ECB and BoE rate decisions.  Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Monday 30 January 2023  EUR/USD recovers from last week’s low EUR/USD is seen bouncing off Friday’s low at $1.0838 ahead of this week’s plethora of central bank meetings by the likes of the US Federal Reserve (Fed) which is expected to hike its rates by 25-basis points, the European Central Bank (ECB) and the Bank of England (BoE) which are likely to raise their rates by 50-basis points (bps) respectively. The currency pair thus remains on track to reach the late April 2022 high and the 50% retracement of the 2021 to 2022 descent at $1.0936 to $1.094 while it stays above Friday’s $1.0838 low on a daily chart closing basis. A drop through $1.0838 would engage the mid-January $1.0766 low. While above it, and the mid- to late-December highs at $1.0736 to $1.0715, the medium-term uptrends remain intact. Above $1.094 lies the psychological $1.10 mark. Further support can be found around $1.0663 to $1.0658, the 16 to 28 December highs. Source: IT-Finance.com EUR/GBP bounces off December-to-January uptrend line EUR/GBP revisited but then bounced off its December-to-January uptrend line at £0.8763 while awaiting Thursday’s ECB and BoE rate decisions, with both central banks expected to hike rates by 50 bps. While £0.8763 underpins, the £0.8828 November peak as well as the £0.8834 - 22 December high - will be back in play, above which sits more significant resistance which can be spotted between the December and current January highs at £0.8877 to £0.8897. Only a slip through £0.8763 would engage the 55-day simple moving average (SMA) at £0.8735 and current January low at £0.8722. If slipped through, the 23 November high and 19 December low at £0.8701 to £0.8691 could once again be reached. Further down sits the 28 November high at £0.8676. Source: IT-Finance.com GBP/USD continues to range trade below its $1.2446 December high GBP/USD’s September advance from its $1.0350 all-time low struggled to overcome its December high at $1.2446 early last week and has been trading in a sideways trading range below this high ever since while awaiting Thursday’s UK central bank decision. This is not to say that the cross might not eventually rise to above its December and January highs at $1.2446 to $1.2448, provided that the 24 January low at $1.2263 doesn’t give way.mWere this to happen, the 9 January high at $1.221 may be reached. A rise and daily chart close above last week’s $1.2448 high would engage the minor psychological $1.2500 mark, above which the 7 June 2022 high can be found at $1.2599. Source: IT-Finance.com
    • The Federal Reserve (Fed), Bank of England (BoE), and European Central Bank (ECB) all meet this week.  Jeremy Naylor | Writer, London | Publication date: Monday 30 January 2023  The US dollar has the upper hand, however if there’s a dovishness to the Fed’s statement, which may happen if there’s the determination to wait to see what effect the big rate rises are having, and the ECB is hawkish, insisting on more rate rises to combat inflation, then this could stir the direction away from USD. The BoE, like the ECB, is expected to raise rates more than the Fed.   Fed It's a big week this week for central banks and things kick off tomorrow, Tuesday 31st of January, with the Federal Reserve (Fed) at the beginning of its two days of meetings. It's expected to deliver another interest rate rise after seven in 2022, although at a much slower rate. The market expects a 25-basis point (bp) rise in the federal funds rate to between 4.5 and four and three quarter percent. Remember in December US inflation decelerated for a sixth straight month at 6.5% - its lowest level since October 2021. US central bankers want to continue to raise rates but much more slowly to see how the economy is responding to the previous hikes and make sure it doesn't go too far. Dollar basket This is the dollar basket just coming out at this line of support at 10110, which is the low we had back on the 27th of May 2022. The MACD has turned around this oscillator here at the bottom indicating that we've got the blue line over the red dotted line, which indicates to me that potentially we do have some more upside to go technically, but it's all about that statement from the Fed that we've get at 19:00 Wednesday evening UK time. I f you are long on this chart going into the news, your stock would be down here at something like the 10075 level, 10167 is over trading at the moment. Any upward move would be capped out potentially by this rise up to here at 10308, which is the lows we had back on the 14th of December. BoE Then on Wednesday, the Bank of England (BoE) starts its two-day meeting with inflation at 10.5% in December, higher than in the US and the eurozone with wages excluding bonuses rising at their fastest rate since records began back in 2001. The Bank of England is likely to raise its main interest rate, the base lending rate, for a 10th consecutive time by half a percentage point to 4%. Now, at its last meeting in December, the monetary policy committee voted for a 50bp rise to 3.5%. But the vote was split three ways to members voting to end the rate rises while one backed a larger three quarter point move. The balance went for that move up that we saw, according to Reuters. Economists see a similar split next week because of the uncertainty around inflation. The big question is, how fast will inflation fall? Is there a risk of bottoming out above the Bank of England's target? GBP/USD Well, we take a look at what's happening sterling against the US dollar for this. Now this is sterling rising or has been rising against the US dollar the last couple of days, sterling has been falling against that slightly stronger greenback. And if you're short on this, your stock goes above this line of resistance at around about 12480 level - 12370 trading there at the moment. But we'll certainly be looking to see just what's going on with sterling as to the hike cycle. They see just one rate rise more to four and a quarter percent in March, while financial markets see the end of tightening mid-2023 at 4.5%. ECB Then on Thursday, just after the Bank of England decides on its interest rate picture, the European Central Bank (ECB) is seen hiking by another 50-basis points to 3%. There's little doubt about that, according to the CBN members. They've been very transparent in the last few weeks, agreeing with the Christine Lagarde scenario of another significant rate rise. The ECB is also further away from reaching the limit of its rate. It started its tightening cycle later than many central banks, only raising its main base rate by a total of 250 basis points in 2022 compared with 325 basis points at the Bank of England, and 425 basis points from the Federal Reserve. EUR/USD Let's take a look at what's happening with the euro/dollar trade around that interest rate decision in the opposite direction. As with the DXY, we've seen the MACD turn around in the last 24 hours indicating the momentum is now beginning to pick up on the downside. If you're short on this trade, your stock goes above this line of resistance, your stop just underneath the 110 level, 20855 is where we are. Support kicks in at 10766. That's it. You are short on this, short euros against that stronger US dollar. But it does depend on there being an emphasis on the US dollar. If we get anything like a dovish Fed and a hawkish euro area, we could well see this recent trend reversed with a move up for the euro/dollar trade.
    • Gold and Brent crude consolidate, as natural gas drops into 21-month low Gold and Brent crude struggle to maintain recent gains, while natural gas collapses into a fresh 21-month low. Source: Bloomberg      Joshua Mahony | Senior Market Analyst, London | Publication date: Monday 30 January 2023  Gold consolidates as stocks head lower Gold has struggled to maintain its upward trajectory of late, with the precious metal losing some of its shine thanks to a similar sideways trajectory for the US dollar. A resurgence in the dollar could bring about a turn lower for the price of gold, meaning that there is also a likely positive correlation between equities and precious metals for the time being. Nonetheless, from a purely technical standpoint, the recent consolidation phase continues to point towards another move higher as long as price does not break back down through the most recent swing-low of $1911. Should that occur, it would make sense to expect a potential move lower for gold. Source: ProRealTime Brent crude turning lower from resistance zone Brent crude has been struggling to maintain its upward trajectory over the past week, with price starting to weaken from a key resistance zone. The descending trendline and 100-simple moving average (SMA) have converged to bring a key area that could see the wider downtrend kick in once again. The stochastic oscillator provides another potential signal that the bears could come back into play once again here, with the break through the 80 threshold highlighting a reversal in momentum. Looking back at previous occasions that we have seen this signal, we have seen periods of weakness following each of the past five signals (as shown by vertical dotted lines). For a bearish confirmation signal, watch for a break below the $83.97 swing-low. Source: ProRealTime Natural gas continues its declines, as price hits 21-month low Natural gas has been hit hard over the course of the past five months, with price falling back from almost $10 to the sub-$3 mark we see today. As we look to emerge from a largely mild European winter, the healthy stockpiles largely bring the conversation of a potential squeeze in prices to an end. Whether that issue resurfaces with regards to next winter remains to be seen, but sentiment has clearly taken a hit of late. Nonetheless, there will likely be a point where the price of natural gas is deemed to have gone too far, with current prices trading back within a crucial historical zone that has previously held price for an extended period. While there is a chance that that the bulls come back in at some point, the downtrend still remains in play as highlighted on the four-hour chart. A rise up through $3.322 would signal a potential bullish reversal coming into play. Until then, the bearish trend remains the dominant force that should continue to send prices lower. Source: ProRealTime
  • Create New...