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Oct 31 - 08:36 AM
GBP/USD - COMMENT-Relief May Spur A GBP/USD Rally But Not A Sustainable One
First appeared on eFXplus on Oct 31 - 06:40 AM

Any hint Brexit may be resolved is being traded on.
With traders short pounds there's room for a bigger rise if traders believe this year's election will end the saga.
But relief will be followed by the reality of a divorce, and divorces are expensive.
The pound could rally in the rarefied air of year-end markets, but it may be set up for a big decline.
There are some key areas for traders to focus on.
GBP/USD was largely trading 1.40-45 before Brexit.
To surpass that now will take an substantial change for the better.
Perhaps that can happen some years after Brexit.
The probability now is remote.
After the 2016 referendum, GBP/USD traded 1.28-1.36 for a while.
Since Brexit became possible, the long-term range has dropped to 1.20-1.40.
It could break higher, into 1.30-35, during a squeeze, but little chance that would be maintained.
After a split, cable's likely to spend a long time below the mid-point of its long-term range.

Refinitiv IFR Research/Market Commentary


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