Brexit scenarios represent more downside risk
31 May, 2019
Yesterday was a quiet day for both data and politics in the UK and the pound remains stagnant against the major pairs.
Preliminary US GDP figures were released but this didn’t have much effect on cable as the outcome was as expected at 3.1%. (There are three versions of GDP figures; Advance, preliminary and final. The advance release comes first which is why it tends to have a greater impact on the value of currencies).
This morning however sees Tory MP Mark Harper put his hat in the ring and become the 12th conservative MP to enter the race for Mrs May’s job. Bojo remains the favourite with the winner is expected to be announced in late July.
One half-interesting snippet of commentary from yesterday came from Ian Duncan Smith, who suggested that the current leadership contest rules could lead to “chaos”. The reason is that as it stands, a candidate only needs two MP’s to nominate them in order to run, which with 12 candidates now running, could mean a lengthy and tedious race to the top. Something we can all look forward to.
Adding to this, it has been revealed that donations to the conservative party halved in the first three months of the year and are significantly down over the last month, putting overall donations to the labour party and conservatives on a level-pegging. This confirms that many in the business community consider the hard-line ‘no-deal’ approach to Brexit to be damaging to business and industry. And, it has even been suggested by some that a Corbyn leadership would actually be less damaging than a no-deal Brexit.
As has been mentioned numerous times before, most Brexit scenarios represent more downside risk than upside potential for the value of the pound. In instances such as the one we find ourselves in at the moment, utilising ‘Stop-loss’ and ‘limit-orders’ to manage your currency exposure is a pro-active way of capitalising on short term peaks in the value of the pound while also removing downside risk. If you have not already considered a stop loss or limit order to manage your currency exposure, please speak to your dedicated consultant today.
In terms of data today we have Canadian GDP m/m figures to look out for at 1:30pm.
In other news, five-year-old feline ‘Hatty’ got stuck on a railway for six days, only to miraculously walk home after rescue attempts were called off. Catastrophe avoided.