The British Pound has been rising for days, and really strongly! What’s going on? For a long time it was quite simple. If the Brexit hardliner Boris Johnson had head water, the Pound went downwards. If the Brexit opponents and EU friends had head water, the Pound rose. Because the market wants a Brexit as soft as possible with a nice contract, or preferably no Brexit at all. But in the last weeks and months the picture has changed more and more. Boris Johnson was literally pushed into a situation by parliamentarians in London where he had to make a Brexit deal with the EU. And so Boris Johnson is now FOR a Brexit deal.
British Pound believes in clarity about Brexit
Now it’s all about one thing for the forex market. After three years of pure chaos, it is enough. They finally want clarity, planning security. In exactly one week, next Thursday 12th of December, a new parliament will be elected in Great Britain. The polling stations will not close until 11 p.m. German time, so the market will not be able to react until next Friday morning. After the Brexit party’s quasi renunciation in favour of Johnson, it is becoming increasingly clear that his conservatives will clearly win the election. According to the latest polls, the Tories will reach 43% and Labour 32%. So it is becoming more and more likely that Boris Johnson will be able to get through his deal with the EU quickly after 12th of December.
This increasing probability of an approaching certainty for Great Britain in its relationship to the EU makes the British Pound more and more optimistic. By the way… if you bet as a “free spirit” against the current wonderful mood and bet on a falling Pound, you could really get fat if you succeed, via CFDs, options etc.. But we don’t want to animate anyone here! Since last Friday alone, the Pound has risen against the US Dollar by 230 pips to 1.3130! Who rises high, can also fall low? In September, the GBPUSD exchange rate was even at 1.20 for a short time. What a rise. The following chart shows the Pound vs USD since January.
The Pound is now trading against the US Dollar at its highest level since May. Against the Euro, it is currently trading at its highest level since May 2017! EURGBP was trading above 0.93 this August, now at 0.8446. Currently it is a real euphoria in the Pound. Expectations are therefore very high. If something goes wrong again, a clear setback can quickly come. Shorties could profit well. But as we said, there is euphoria at the moment, and there is no negative news about Brexit. Wait and see. Next Friday morning we at least know how the British voted.