The consensus view is that the market seeks a resolution to Brexit uncertainty of when or even if the UK would leave the EU. Which given current extreme chaos would suggest that the British Pound should be an death spiral of sorts.

(Charts courtesy of stockcharts.com)

The Pound fell sharply following the announcement that Parliament would be suspended so as to enable a hard Brexit. However subsequent chaos of the Governments loss of control of Parliament with Remainer's taking control of business of the house has seen a sharp bounce in sterling which is contrary to what one would expect given extreme chaos and uncertainty.

Taking a look at the British Pound since Theresa May took office July 2016 against key Brexit events paints a different picture of what is driving the British Pound where the Brexit factor is concerned.

The message from the chart is that Sterling favours Britain REMAINING in the European Union and the further Britain is from that Objective then the weaker Sterling tends to be. So certainty or uncertainty of outcome does not matter as much as the direction of travel. For instance sterling entered into a mini bull market following Theresa May's disastrous June 2017 general election, as the result had crippled her chances of achieving a Brexit in anything other than name only. Likewise the Chaos of a paralysed May government since the publication of the EU Brexit deal in November 2018 with it's Northern Ireland backstab resulted in sterling rally from 1.26 to 1.32. Against which Brexiteer Boris Johnson taking control saw sterling fall from 1.27 to a low of 1.195 before Remainer's took control of Parliament.

Therefore for sterling strength there needs to be NO Brexit or a very weak Brexit. Whilst sterling weakness would accompany a Hard No Deal Brexit which is what the market had been pricing in since Johnson took office. However on the flip side the market has already priced in a NO deal brexit to some degree which is on par with the original drop of October 2017 on No deal fears.

In terms of the range of possibilities for sterling for the remainder of this year then GBP could range as high as 1.34 or as low as 1.10. And no one knows which is more likely given the state of extreme chaos in Westminster.

However, I am not going to just leave things at that, instead will seek to conclude in the most probable direction of travel for sterling over the coming months.

The rest of this analysis has first been made available to Patrons who support my work: https://www.patreon.com/posts/british-pound-vs-29840414

Westminister BrExit Chaos Puts Britain into a Pre-Civil War State
Boris Johnson a Crippled Prime Minister
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy
General Election 2019 - Opinion Polls
UK General Election Forecast 2019 - Betting Market Odds
British Pound vs Brexit Chaos
British Pound Fundamental Analysis
USD Index Analysis
GBP Long-term Analysis
GBP Trend Analysis
British Pound GBP Forecast Conclusion

So for immediate First Access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

Scheduled Analysis

Bitcoin Update
UK Housing market series
Stock Market Trend Forecast Sept to Dec
Machine Intelligence Investing stocks sub sector analysis
US Dollar Index
NASDAQ
EuroDollar Futures
EUR/RUB

Recent Analysis includes:

Your Analyst

By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.