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Sep 08 - 07:55 AM

GBP/USD - COMMENT-Hard To Picture A More Bearish GBP/USD Situation

By Jeremy Boulton  —  Sep 08 - 06:05 AM

GBP/USD has rallied strongly just before the UK exits its European Union transition period and it looks like hard Brexit.
It's hard to visualize a more bearish situation.

GBP/USD has risen over 10% since the end of June and has rallied over 18% from March's low.
Since March the pound has been traded like a safe haven but has no safe-haven attributes.
All short positions traders held have been unwound, leaving them badly positioned for a hard Brexit -- especially on top of the recession triggered by the coronavirus crisis.
That's surely worse than any Brexit that could have happened before the virus.

Prior periods of concern about Brexit have hit sterling extremely hard, with GBP/USD falling between 10.6 and 23.5% -- and that with traders betting on a drop.
At the last count GBP/USD traders were long betting against the coronavirus-ravaged United States and ignoring the UK's plight.

The UK economy entered this crisis in a weaker position than its U.S. peer and with far smaller stimulus than in the United States, the UK's exit may take much longer. UK stocks have been sending warning signs for some time. nL1N2G107Z


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Source:
Refinitiv IFR Research/Market Commentary

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