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How will a no-deal Brexit affect GBP?

How will a no-deal Brexit affect GBP?
Asked by
Sam Button categorie-icon time-icon2 months ago
1 Answer Answer Question

Justin Freeman
Answered time-icon2 months ago

Whilst the Brexit debate is certainly generating more heat than light at the moment you’d do well, as a trader, to see this general confusion as an opportunity to make profits.

News events, particularly the risk of a no-deal scenario are continuing to generate high levels of price volatility in a multitude of instruments, not least GBP.

From a Fundamental Analysis point of view, GBP, as the currency of the UK, will be bought and sold according to a variety of factors which include, but are not limited to:

Fundamental economic health of the UK:

Essentially, the currency can be seen as a measure of the health of a country. A state that is doing well will likely see its currency strengthen against others.

Interest rates in the UK:

Some might be attracted or distracted to holding capital in GBP according to the risk-free rate of return on offer. This is often referred to as ‘hot-money’ as it can move very quickly across the global markets.

The amount of international trade the UK takes part in:

Relates to those that need to buy GBP to carry out trading/commercial activity.

From a Fundamental trading perspective the two key points to hold in mind are: that there has to be uncertainty about how a no-deal Brexit would affect those factors; and there also has to be uncertainty about how likely no-deal is?

From a Technical Analysis point of view there are a range of signals and indicators that are proving useful to traders.

The below from Pepperstone is a free research report that can be readily obtained from their Autochartist research base (https://pepperstone.autochartist.com). To be able to access that area you’ll need to set up a Demo account (here: https://secure.pepperstone.com/register?legalEntity=individual&locale=uk) but that takes seconds to do and is well worth it.

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