We are 3 years into Brexit, traders have seen the GBP being the most volatile symbol surrounding the uncertainty of Britain's future economic relationship with the world in particular Europe.
During the day of the referendum the GBP hit 1.50 to the USD, up until today it has held a range between 1.20/1.44 Our experts at Trade Magnates are predicting that the most likely outcome will be ‘Deal’, this would be bullish for the pound and would likely result in a move back to 1.45+ for the pound against the dollar. However, let’s see other possible outcomes starting with a ‘No Deal’, although this outcome seems unlikely, as the impact on imports and exports will be catastrophic.
The prospect of UK GDP dropping by 0.5% per annum over the next decade-plus would drop the pound about 10% to around 1.20 or just below. This would occur due to a re-rating in the prices of UK financial assets and a lowering of interest rates, not very attractive right.? What about a possible temporary ‘No Deal’ to allowing a Brexit extension, to make room for further negotiations.
Trading under this condition will most certainty see a quality long trade, as once the GBP drops due to temporary ‘No Deal’ it will be expected that the pound will stabilize and recover. If the Brexit games continue with the opposition Labour Party campaigning on the platform of “Remain” a second referendum maybe called, GBP will be high at 1.50 or above against the dollar.