Market News & Analysis

Top Story

Daily Brexit update: Mind the news gap

Daily Brexit update: Mind the news gap

What do markets do when there’s any sort of hiatus in top-tier news? Typically, markets attempt to ‘fill the breach’ by reacting (often over-reacting) to developments that would usually be deemed secondary, if not trivial. As widely expected, including by us, here, the dearth of material developments has left sterling traders to prey to the run of headline driven sentiment; and not all headlines will turn out to be as important or material beyond the relatively short term. There’s been a fair amount of headline-grabbing comment that is factually correct whilst stating little that was not already known or suspected. The head of Northern Ireland’s civil service expects “grave” consequences for the region in the event of a no-deal Brexit. Closer to home, Labour heavy hitter John McDonnell reportedly sees the chances that MPs in his party voting for Prime Minister Theresa May’s returned Brexit deal on or by 12th March as low. In the meantime, mood music filtering out of the only high-level talks taking place between the EU-Brussels this week doesn’t sound hopeful. UK is represented by Attorney General Geoffrey Cox, yet the chances of a breakthrough remain low. Few of these points are revelations. And whilst volatility measures show expectations of sterling gyrations over the next month or so rising again from recent multi-month lows, the pace isn’t eye-catching. Realised volatility is also contained. The pound against the dollar is set for its fourth consecutive daily fall though the down moves are well short of the biggest daily ranges of November, December and to a lesser extent, January. Sterling against the dollar has returned to a prior short-term range bounded by support close to $1.31 for a U.S. session  low, where the rate duly bounced. A spike to $1.3160 high followed before the down move resumed. The uptick was well short of Tuesday’s $1.3197 high, suggesting sellers continue to target the $1.3094. It would take trade below there to raise the ‘threat level’.

Join our live webinars for the latest analysis and trading ideas. Register now

From time to time, GAIN Capital Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.