
Pound’s Brexit Will Be Wild
(Bloomberg) — Forex Signals; The pound’s reaction to a decision by the U.K. and European Union over trade will probably be more volatile now that liquidity across global currency markets has diminished ahead of Christmas.
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If there’s a trade agreement, “there will be more demand for the pound than the market can absorb in such a thin market, so we’ll see spikes but it will level off over time,” said Bob Stoutjesdijk, a Rotterdam-based fund manager at Robeco Institutional Asset Management.
He sees the pound surging as much as 3% on a deal before ending the day up 2%, and tumbling up to 4% if talks collapse, because investors are long on sterling. The currency on Wednesday climbed 0.6% to $1.3434 as of 11:01 a.m. in London.
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The pound is already trading in turbulent territory as the time for a deal runs out. Volatility over the past week is near the highest since March, when the coronavirus roiled global financial markets. At 14%, it’s nearly double that of the euro-dollar pair. And its implied volatility beats all other currencies, save Brazil’s real and Turkey’s lira.
Britain says Brexit trade deal
The seasonal pattern adds fresh drama for traders already grappling with a year-end deadline for reaching a trade deal and the economic fallout from the coronavirus pandemic.
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“Lower volumes equal higher volatility on any news,” said Luke Hickmore, a fund manager at Aberdeen Standard Investments who helps manage 35 billion pounds ($47 billion).
Pound’s Brexit Will Be Wild

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Pound’s Brexit Will Be Wild
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