After seeing renewed optimism at the start of the month, the pound has been on a downward slope since news that the deadline for a Brexit deal would be delayed further until October 31
With the pound consolidating under $1.30 USD for more than a week, the question will be asked by Forex traders about what the near future holds. Will Brexit indecision keep the value down, or will we see a rebound if sentiment turns on exit talks?
May’s status key for pound
UK Prime Minister Theresa May could well be the key for whether the pound continues its current trend.
May recently faced another challenge to her leadership position, despite having survived a no-confidence vote in January this year. Despite rules stating she could not face another challenge within 12 months of the previous vote, some MPs have been calling for a change to party rules to allow another challenge.
Despite the 1922 Committee upholding May’s position, for now, she remains in a tenuous spot. Committee chair Sir Graham Brady has called for “a clear roadmap forward” regarding May’s departure, should further talks fail.
With May in the middle of much of the indecision and scrutiny of Brexit proceedings, a change in the UK’s leadership is sure to have a powerful effect on the pound. One could expect, at least in the short term, a spike should the public have renewed optimism on a deal being arranged. Traders should certainly take a keen interest on May’s status, to be positioned to benefit should she step down.
USD gaining momentum?
While the pound is going through a lean patch, USD may be trending the other way. An unexpected rise of 3.2% of the US’ GDP in the first quarter of 2019 was recently announced, indicating positive signs for the USA’s economy. Should US-China trade talks progress well, we could indeed see even more positivity on the side of the USD.
Momentum for the USD comes at a time when the pound is trading flat. Even if positive signs show up for the pound in the coming weeks, it may have a hard time gaining ground on the USD if the latter continues to see an upward trend.
Is volatility good for traders?
Brexit should continue to present itself as an opportunity for Forex traders. Over the last month, the pound’s value versus USD has given traders both spikes and dips, spiking as high as $1.31889 and as low as $1.28690. Currently trading on a downward trend, an opportunity is there for traders to position themselves for the next spike.
If you’re not equipped with a Forex trading platform already, you can download a popular trading tool such as the Metatrader 4, and start trading the pound versus currencies such as USD or EUR.
Now should be a good time to get in on the pound from a Forex perspective, before a resolution on Brexit is reached. One way or another, traders can expect significant movement for the pound before the year is up.