Brexit process reaches fever pitch….

Sterling with Brexit, as one trader quips, is a currency that trades ‘with the characteristics of an emerging market currency.’ Indeed.

After postponing the vote on the Brexit deal, PM May is now facing a full-scale assault on her leadership. She faces the vote today (Wednesday). Will she survive? Probably. But what will be the cost? Nobody knows. How will this impact Brexit. Again, nobody knows.

Drama in Westminster leads drama in Sterling. GBPUSD broke down lately to smash the 1.270/1.26 support band. But there is some tentative support at 1.240 and 1.220 – although it is quite difficult to judge how effective these levels are as ‘demand points’. The better choice would be the big round number level at 1.2000 (see below).

Yes, Cable is currently weak with downward momentum. (I talk about a short in GBPJPY recently.) But given the constant flux in UK politics, we can not rule large countermanding dynamics that cover several days of distance in one big swoop. Short, but with lower position size than normal.

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