Tuesday, March 28, 2017 3:39 AM EDT
In our 3 Article 50 scenarios, a short squeeze is certainly an option. The team at Barclays lays out the case for a “buy the fact”.
Here is their view, courtesy of eFXnews:
One of Barclays Capital Research’s ‘greatest conviction’ now lies in the pound where Barclays expects the triggering of Article 50 on Wednesday to initiate a strong rebound in GBP from historical undervaluation as ambiguity over Brexit recedes.
“While the event itself has been widely broadcast and the GBP response is likely to be limited, we expect this regime shift to initiate a “sell the rumor, buy the fact” rebound in sterling over the coming weeks and months,” Barclays argues.
Barclays’s rationale is that sterling’s exchange value has been depressed to historic low, and any shrouding of the Brexit fog is likely to trigger a confluence of short-term factors to accelerate a rebound in the currency.
In terms of GBP near-term dynamics on the immediate aftermath of PM May’s letter, Barclays notes that the President of the European Council Donald Tusk will present the initial Brexit guidelines to the EU27.
In line with this view, Barclays targets GBP/USD at 1.30, 1.31, and 1.32 by the end of Q2, Q3, and Q4 respectively.
Disclaimer: Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, risk appetite and the trader's level of experience should be carefully weighed before entering the Forex market. There is always a possibility of losing some or all of your initial investment / deposit, so you should not invest money which you cannot afford to lose. The high risk that is involved with currency trading must be known to you. Please ask for advice from an independent financial advisor before entering this market. Any comments made on Forex Crunch or on other sites that have received permission to republish the content originating on Forex Crunch reflect the opinions of the individual authors and do not necessarily represent the opinions of any of Forex Crunch's authorized authors. Forex Crunch has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: Omissions and errors may occur. Any news, analysis, opinion, price quote or any other information contained on Forex Crunch and permitted re-published content should be taken as general market commentary. This is by no means investment advice. Forex Crunch will not accept liability for any damage, loss, including without limitation to, any profit or loss, which may either arise directly or indirectly from use of such information.
less
How did you like this article? Let us know so we can better customize your reading experience.