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Brexit GBP USD Trading Strategies


Jun.14.2016

Brexit GBP USD Trading Strategies

Hola! Como estas? I'm back from Forex Day Madrid and ready to give you the latest tips on Brexit GBP USD trading strategies. Yes we talked a whole bunch about Brexit but we also ate, and ate, and when I thought you can't eat no more, we continued to eat again. Conclusion: Spanish people sure know how to eat. Anywho, if you're wondering what the heck Brexit is, what the heck could happen in case of a Brexit, and how the heck you should be managing your account during the Brexit referendum, you are in the right place. Amigos, it is time to pull an Invest Diva Diamond  Analysis and build a trading strategy for June 2016.

[Scroll all the way down for a surprise]

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Brexit GBP USD Trading Strategies Brexit GBP USD Trading Strategies

1- Brexit GBP USD Trading Strategies - Fundamentals

Let's first start with what the heck a Brexit is: it simply means an EXIT of BRitain from the European Union. On February 20th David Cameron, Britain's prime minister, set June 23rd as the date for a referendum on Breixt. Several recent polls have shown small majorities in favor of a Brexit at the referendum.

Why are there Brexit talks?

The Brexit 2016 topic became especially popular in February. However rumors about it have been around for years. Even at the best of times Britain has always been a semi-detached member of the EU. Simply put, many British people think they can do better alone. They also think the EU benefits more from the UK, than UK from EU. Economic problems with some members of the EU, such as Greece, haven't made the EU membership any more appealing either.

 

Who is in favor of a Brexit?

Britain's "Leave" campaign opened up a 7-point lead over "Remain" ahead of a referendum on membership of the European Union an opinion poll showed on Monday. Those on the “Leave” camp point to the benefits of not having EU-related red tape and the U.K.’s freedom to implement its own policies on foreign immigrants.

Other Brexit backers include those who complain about rules set in Brussels and those who like to reject what the establishment wants, just because.

Who doesn't fancy a Brexit?

Number one Brexit 2016 opposition would be the majority of UK’s top businesses. Their CEOs fear the disastrous consequences of it. A pro-EU letter was signed by just over one-third of the heads of the FTSE 100. The City of London is largely in favor of staying inside the EU. Also a non-supporter is UK’s most important strategic ally, the United States.

What are the latest Brexit predictions?

With just ten days to go before the EU referendum, the latest poll of polls shows British voters are evenly split.

How could a Brexit 2016 impact the UK's economy?

Even if Britain secured some form of new trade deal with the EU, some believe the UK economy will still be at massive risk.

On the other hand, we have a debate going on about housing prices in case of a Brexit.

Here's are what some analysis reports show:

  • Jobs: Leaving the EU could cost 950,000 jobs lost by 2020
  • GDP: Brexit 2016 could cost the UK as much as £100 billion – the equivalent of around 5% of GDP — by 2020.
  • Housing market: Anthony Codling, of the broker Jefferies, believes housing prices probably won't change much in case of a Brexit. His argument is that a Brexit makes no difference to the average man on the street. Whether you want to move house or have another child makes no difference in or out of Europe.

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The debate on how a Brexit could impact the UK economy remains pretty heated. While there seem to be a number of positive outcomes especially in terms of safety, there could be long-term damages to the UK economy as well.

How are US Elections Impacting Brexit GBP USD Trading Strategies?

This poor dancing pair on the forex dance floor are having it pretty rough this year. On one hand Mr. British Pound is struggling with Brexit headlines. On the other hand, Ms. US Dollar is dealing with panic attacks from Trump supporters. Together, the have managed to make one dysfunctional currency pair exposed to a ton of volatility.

2- Brexit GBP USD Trading Strategies -  Technicals

In the days leading up to the referendum expect to see the pound respond less to the U.K.’s economic reports and trade more on Brexit-related updates. Any pro-Brexit poll is likely to weigh on the pound while anti-Brexit headlines could push the currency higher. Oh, and keep your eyes on the euro, too! Remember that any exit from the EU is likely to affect its common currency.

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Daily Chart Market Sentiment: GBP/USD just completed a Double Top chart pattern and broke below the ichimoku cloud. This shows strong bearish market sentiment, but could also call for a correction.

Brexit GBP USD Trading Strategies - Daily Chart Ichimoku Brexit GBP USD Trading Strategies - Daily Chart Ichimoku

Big Picture Monthly Chart:  The 1.39 support has not been broken by the GBP/USD pair in like... ever. It tested this level once back in 2008 and once in 2001. However in February 2016 the pair totally got their feet fixed on the level and is now approaching it once more.

Brexit GBP USD Trading Strategies - Monthly Chart Support Brexit GBP USD Trading Strategies - Monthly Chart Support

3- Brexit GBP USD Trading Strategies - Overall

As a savvy Invest Diva student you should already be able to put the two and two together and come up with your own GBP/USD Forex Trading Strategy. But for our newbies and first time visitors, let me elaborate.

Brexit trading is going to be a tough call for long term traders because none of us have a crystal ball. The 1.39 level is the key super hero trying to protect the pair from falling to an all time low. So it could be a safety net for those looking to trade the Brexit volatility.

Since the vote is currently too close to call, it might be a good idea to lighten up your exposure ahead of the referendum. The unprecedented nature of a Brexit could expose you to more volatility than your account can handle. Remember the SNB shocker from last year?

If you’re still planning on trading the event though, then you should at least take note of the changes your broker has made to cushion you against a total wipe out.

 

Here are the important GBP/USD  approximate levels to keep an eye on:

Support Levels Turning Point Resistance Levels
1.39 1.43 1.46
1.41 1.46 1.53

 

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Kiana 喜愛成
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