Threat Of A Brexit
Today’s Spotlight Market?
It has been an interesting weekend in European politics. The prime minister of Great Britain, David Cameron reached an agreement with the European Union regarding concessions the EU would make in order to keep the United Kingdom as a member. Cameron then announced a nationwide referendum on remaining in the EU to be held on June 23. This promises to be a very heated debate as maverick London mayor Boris Johnson announced that he would be campaigning against the UK remaining in the EU.
Fundamentals
British Pound futures reacted violently when trading opened for the first time since news of the agreement and referendum was announced. The Pound sharply declined as traders reacted. Markets don?t like uncertainty and the Pound sank as the US Dollar rose. The pound reached lows that haven?t been seen since the financial crisis in early 2009. The Pound has been on a wild ride over the past 2 years with traders speculating on the Scottish independence referendum as well as the 2015 UK General Election. As of now, it looks like the British Pound will be volatile as traders react to news and polls leading up to the crucial vote in June.
Technical Notes? -? View Today’s Chart
Turning to the 3 month continuation chart, we see several bearish trends. The recent rally failed to reach the level of the previous highs. Today?s trading saw the Pound test the support level at 1.4080. Trading has recently fallen below the 20 day Simple Moving Average, which is acting as a short term resistance level. 14 day Relative Strength Index is showing as a mildly bearish 36.30.
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