InvestDiva Kiana Danial advises to avoid trading GBP crosses until Brexit outcome is known in June
Opinions vary with regard to the current political wrangling that is taking place within the British government with regard to its future as a member of the European Union, or as an independent nation with no membership of a union which ties it inexorably to the nations of the mainland. Many industry experts as well […]
Opinions vary with regard to the current political wrangling that is taking place within the British government with regard to its future as a member of the European Union, or as an independent nation with no membership of a union which ties it inexorably to the nations of the mainland.
Many industry experts as well as market analysts have taken a close look at the potential outcome of Britain’s future place within, or outside of, the European Union, with a widespread view focusing on the fortunes of Britain without the European millstone around its metaphorical neck.
At the end of last year, companies from outside of the Western hemisphere made strong predictions for the US dollar, considering that it may be the stable currency which would be used as a vantage point from which to ride waves of volatility which could affect the GBP and EUR as Europe sinks deeper into the mire, and as Britain looks at its future as a member state.
Indeed, Japanese electronic trading giant MONEX Group predicted that the US dollar would be the currency to trade in 2016.
InvestDiva Kiana Danial takes a look at this from the perspective of retail traders, as well as a North American resident who maintains that the EU nations would be the losers should Britain elect to move out of the European Union.
Kiana Danial explained to FinanceFeeds “I agree with what almost everyone says, which is that a vote to leave by Britain, the second-largest EU economy, would be catastrophic for confidence in an already fragile Europe.”
In terms of the effect on the market that it may have, Ms. Danial explained “This would create a ton of volatility in all GBP and EUR crosses, maybe even the CHF depending on the positioning of traders, this could be yet another Swiss Jaw-boning for brokers.”
“Some agency brokerages which were passing their trades directly through to liquidity providers lost massively due to exposure to negative client balances as a result of the volatility with the SNB event last January, while others operating a B book made a fortune, however considering there is not going to be a ton of a surprise factor, the volatility could general benefit the brokers while causing major difficulties for traders.”
Personally I will be advising my students to avoid trading the GBP crosses for the time being at least until June this year, which is when we will know whether Britain will stay in the EU or not” she concluded.