The Weekly Update: GBP Strategies amidst UK Political Tension

UK Political Tension

Many analysts suggested last week that GBP weakness is related to the political tension in the country. It has been speculated that some members of the Conservatives party are planning to overthrow Theresa May. We were aware of these speculations but it was not the trigger for GBPUSD recent weakness.

During political tension the local currency tends to weaken against a basket of currencies rather than against a single currency. We suspect the main reason for GBPUSD weakness were stops that were triggered and targeted by the market.

We already noted several hours after initiating the long trade that a dip towards the 1,3050 may materialize and updated all our members. We tend to refrain from providing an in-depth political analysis on any countries as it is irrelevant to trading.

The UK is prepared for a ‘no deal’ with the EU should no agreements will be made on the divorce bill by the end of 2017. The EU is attempting to add further pressure on the UK as a trade deal with India is being discussed. By the end of the year we may have greater clarity on the brexit negotiations.

EUR Catalan Independence

Catalan lawmarkers are expected to convene on Tuesday and may announce Catalonia’s independence. It is still unclear if this will be the path Catalonia will adopt. We are unable to determine the magnitude of this event at the time of this writing, it will be an event we will have to closely monitor.

Credit rating agencies may act in accordance to the announcement that may be made on Tuesday.

GBPJPY Weekly Chart

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The Weekly Update: GBP Strategies amidst UK Political Tension

GBPJPY Weekly Chart 08/10/17

GBPCAD Daily Chart

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The Weekly Update: GBP Strategies amidst UK Political Tension

GBPCAD Daily Chart 08/10/17

GBPCAD Signal Strategy

We have been tracking GBPCAD throughout last week, waiting for the cross to provide us with a long entry. An entry has been provided at the weekly close. As noted from the daily we chart we presented the price may spike towards 1.6230, which is the potential drawdown.

We will admit that we are displeased with expected gap higher in GBPCAD as all is does is increase the required stop. We will need to assess how the price reacts at the opening of the Forex market and determine how we wish to proceed.

We have also presented GBPJPY weekly chart in an event we will decide to dismiss GBPCAD due to the required stop and potential drawdown. The main difference between GBPJPY and GBPCAD is the time frame the entry was derived.

At the time of this writing we prefer GBPCAD over GBPJPY as we may also note some CAD weakness but we will have to wait for the market to open and for the spreads to stabilize to determine how we wish to proceed. We are focusing on GBP as we expect it to be one of the most attractive currency for some time.

GBPCAD Trade Alert

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The Weekly Update: GBP Strategies amidst UK Political Tension

GBPAD Daily Chart II 08/10/17

GBPCAD long at market price (ask 1.6408)
Take profit: 1.6910
Protective stop: 1.6180
Risk Ratio (RR): 1 : 2.1 (approx.)
Estimated duration: 14 days (approx.)

Price range: Relevant as long as the price is below 1.6450

Note: We are increasing our exposure to GBP. The potential drawdown is a re-test of 1.6230. If such a re-test takes place it may be within the next 48 hours. GBPCAD is a volatile cross.

We will keep monitoring GBPJPY, we cannot have a three-way exposure to GBP without limiting the risk. It was a tough decision whether to opt for GBPJPY or GBPCAD as discussed in the weekly update.

09/10/17 UPDATE: GBPCAD is trading at 1.6507 at the time of this writing.

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The Weekly Update: GBP Strategies amidst UK Political Tension

GBPCAD Daily Chart 09/10/17

We are closing 20% of the long trade at market price.

09/10/17 UPDATE II: We are shifting GBPCAD protective stop to 1.6350. GBP gained against a basket of currencies in today’s session mainly due to speculations the BOE may hike rates in November.

10/10/17 UPDATE: We are shifting GBPCAD protective stop to 1.6420.

12/10/17 UPDATE: Remarks from EU Michel Barner regarding the brexit triggered a bearish spike across GBP pairs and crosses. GBPCAD triggered the protective stop at 1.6440, we are not re-entering the market.


AS THE OBJECTIVE OF THE INTRADAY STRATEGY HAS BEEN MET IT IS NOW ACCESSIBLE TO ALL TRADERS


The Weekly Update: GBP Strategies amidst UK Political Tension

The Weekly Update: GBP Strategies amidst UK Political Tension