The GBP Rises on Expectations of a Comprehensive Brexit Deal

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Ongoing Brexit negotiations have caused significant volatility with the GBP and its major trading partners. The UK has officially initiated Brexit discussions with its EU partners. Brexit Secretary, David Davis and Prime Minister Theresa May are working with their European partners to hammer out the most comprehensive deal possible. Currency traders are eagerly following the process, and hedging their bets by placing call or put options on the sterling accordingly. The latest short-term movement in the GBP/USD pair has been bullish.

Speculators are buoyed by Prime Minister May’s commitment to tackle the hard issues upfront. European negotiators are concerned about the rights of EU citizens currently living in the United Kingdom. Britons voted against remaining in the EU, owing to immigration-related concerns. The UK has been pushing an agenda of limiting immigration to 100,000 people per annum, significantly lower than its current level of approximately 250,000. This has given European legislators pause, for they fear the rights of European citizens may be infringed by Brexit proceedings. The negotiations state that the UK will grant a grace period to EU citizens, including those already in the UK. After 5 years of permanent residence in the UK, EU citizens will have the same rights as UK citizens.

British Prime Minister Extends Olive Branch to EU Leaders

Binary options currency traders are encouraged by the positive news, and the sterling rose accordingly. At last count, the GBP/USD pair rallied towards 1.2740, up 0.48% on Friday, 23 June 2017. Prime Minister Theresa May offered reassurances to the European community after a meeting in Brussels.

Her statement read as follows: ‘… The United Kingdom’s position represents a fair and serious offer… One aimed at giving as much certainty as possible to citizens who have settled in the United Kingdom… Building careers and lives and contributing so much to our society.’

EU officials were not quite as conciliatory in their remarks, however they indicated that the Prime Minister’s comments were a step in the right direction. Besides for immigration-related concerns, the EU is concerned with trade relationships, political considerations and a blueprint for the post-Brexit era with the United Kingdom.

How Should Binary Options Traders Prepare for Next Week?

For starters, the short-term trend of the GBP should be considered as we head into the last week of June. The GBP has rallied for the week ending June 23, 2017, and this momentum is likely to continue. The GBP/USD pair is trading below the 50-day moving average of 1.2850, but comfortably above the 200-day moving average of 1.2550. Traders appear to be encouraged by the Prime Minister’s outreach initiatives.

Of course, it would help if the EU officials adopted a similar stance and were as warm and gracious as the Prime Minister. Discussions are a week old, and the GBP/USD pair is rallying on the back of weak sentiment in the US and optimism about Brexit negotiations in the UK. The Fed’s recent moves to increase the federal funds rate by 25-basis points on June 14, 2017 helped to steady the USD, but did not dramatically weaken the cable.

As a binary options currency trader, some of the important economic data releases to watch out for include comments from Fed officials on the state of the US economy, and whether there is significant optimism about GDP growth moving forward.