{"id":100877,"date":"2017-01-17T06:43:15","date_gmt":"2017-01-17T11:43:15","guid":{"rendered":"http:\/\/countingpips.com\/?p=100877"},"modified":"2017-01-17T06:43:15","modified_gmt":"2017-01-17T11:43:15","slug":"volatility-elevated-ahead-of-mays-brexit-speech-pound-recovers","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/01\/volatility-elevated-ahead-of-mays-brexit-speech-pound-recovers\/","title":{"rendered":"Volatility elevated ahead of May\u2019s Brexit speech; Pound recovers"},"content":{"rendered":"
January 17, 2017<\/div>
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Article by ForexTime<\/a><\/p>\n

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It\u2019s Sterling\u2019s day.<\/p>\n

Financial markets are anxiously awaiting U.K.\u2019s Prime Minister Theresa May speech later today where she will lay out a detailed divorce plan from the EU. Lot of reports were leaked since Sunday on what to expect her to say, and the most interesting part is that she has no interest in partial departure which suggests we\u2019re heading towards a \u201cHard Brexit\u201d. Traders were very fast to react, sending the pound 1.6% lower on Monday to trade below 1.20. However, the recovery in early Asian trade Tuesday indicates that lot of the bad news are already priced in, and for the pound to fall substantially lower it requires more than just signs of a hard Brexit plan.<\/p>\n

If the Supreme court decided that May needs to secure the consent of Parliament before triggering article 50, potentially delaying Brexit for couple of months, this is likely to provide sterling a boost by unwinding many short positions. Traders should be aware that sterling won\u2019t be a one way play and volatility could be elevated to extreme levels.<\/p>\n

On the data front, UK CPI is expected to hit 1.4% in December, up 0.2% from November and 0.5% from October\u2019s reading. This will not only mark the highest inflation rate since mid-2014 but the pace of inflation escalation is pulling U.K.\u2019s real interest rates even lower. \u00a0Of course, this is going to be a challenge for the BoE, but if it indicates anything, it\u2019s interest rates next move is only upward, leaving monetary policy with very few options to support the economy if needed.<\/p>\n

The safe haven Yen is the major beneficiary of the heightened uncertainty over U.K.\u2019s Hard Brexit scenario and Trump\u2019s policies. USDJPY has fallen for the seventh straight day, and declined by more than 4.3% from January 3 peak. The fall in bond yields worldwide will continue to lend some support for the Yen, but whenever this trade is over I expect the Yen to weaken again.<\/p>\n

The U.S. dollar is falling against all its major peers with the index dropping below 101. There\u2019s no fundamental reason for the selloff and I don\u2019t think the dollar\u2019s rally is over yet, but the \u201cTrump trade\u201d has clearly cooled down in the past couple of days as markets still have many answered questions regarding future fiscal policies. Let\u2019s hope we get some answers on Fridays inauguration.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

Disclaimer: <\/strong>The content in this article comprises personal opinions and should not be construed as containing personal and\/or other investment advice and\/or an offer of and\/or solicitation for any transactions in financial instruments and\/or a guarantee and\/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.<\/em><\/p>\n

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\"Forex-Time-Logo\"Article by ForexTime<\/a><\/span><\/strong><\/p>\n

ForexTime Ltd (FXTM)<\/strong> is an award winning international online forex broker regulated by CySEC 185\/12 www.forextime.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Article by ForexTime It\u2019s Sterling\u2019s day. Financial markets are anxiously awaiting U.K.\u2019s Prime Minister Theresa May speech later today where she will lay out a detailed divorce plan from the EU. Lot of reports were leaked since Sunday on what to expect her to say, and the most interesting part is that she has no […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-100877","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/100877","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=100877"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/100877\/revisions"}],"predecessor-version":[{"id":100883,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/100877\/revisions\/100883"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=100877"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=100877"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=100877"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}