Trade the BREXIT 2017

Yes, BREXIT again! It brings memories of how we traded the event in 2016 with our Platinum Elite traders and achieved a total of 1266+ pips with 20 trades within 2 hours.

Let’s analyse how BREXIT 2017 can impact the Financial Markets and explore the issues that could affect the US as well as the UK economy. I would also like to share with you how Platinum traders have already started trading the BREXIT 2017 after the Prime Minister’s speech. The trades are already up with 300 pips gains.

IMPACT OF BREXIT 2016 ON THE MARKETS

GBP/USD fell considerably in 2016 essentially in light of the June 24 BREXIT vote. We at Platinum Trading Academy believe that regardless of the drop from the 1.5000 level to the low 1.2000’s the Pound is seriously undervalued.

The Economy in all fairness has not been impacted by BREXIT at this point in time. However, with the Cable sitting close to parity with the Dollar which we have not seen since 2000 and with the uncertainty of a soft or hard BREXIT, the UNITED KINGDOM has a very large current account deficit. We cannot see any reason at all for Governor Carney from the Bank of England raising or reducing interest rates as this can only weaken Sterling further.

WHAT CAN WE EXPECT FOR BREXIT 2017 AND THE IMPACT?

Parliament voted for BREXIT on the 7th of December 2016.  Despite the fact that this was not a formal endorsement of Article 50, it underlines the probability that parliament will vote to trigger Article 50 (expecting the Supreme Court concurs with the High Court that is up to parliament instead of the legislature).

The big day for Cable will be the implementation of Article 50 to leave the EU which is likely to trigger at the end of March.

What can help the Cable? Either the US economy takes a turn for the worst or we have a soft BREXIT.

At this moment in time, there is no guarantee of a softer BREXIT even if there is a parliamentary vote on the request of the Supreme Court. If we do have a hard BREXIT, a test toward parity is very likely and this will be an event that the Platinum trading team will be trading live.

The UK economy has been doing very well over the last few months and we don’t expect a drastic change. For traders, BREXIT will remain a key event over the next 6 months and will affect the Euro against the USD as well.

POSSIBLE TYPES OF BREXIT 2017:

• No BREXIT: The chances of this now are becoming slimmer day by day. If it does happen, it would mean the UK would adopt a Norway or Switzerland Style arrangement with the EU.

• Soft BREXIT: This would mean a trade agreement between the Eurozone.

• Hard BREXIT:If this is the case and which is the most talked about the topic currently in parliament, it may change all aspects of immigration, trade, and investment.

ISSUES THAT COULD AFFECT THE UK ECONOMY

BREXIT

Six months on from the referendum, nobody outside Downing Street is any wiser about what leaving the EU will entail. The current guess is that it will be a “hard” BREXIT. A clean break including separation from the single trade market. That would have particular implications for the financial sector because some institutions would have to relocate or at least mirror some of their UK operations on the continent, jobs would be lost as would be tax revenues.

CONFIDENCE

Confidence is a fragile thing, easier to lose than to create.

Thus far, consumers have been able to look away from the possibility that leaving the EU could damage their wealth. Nothing has happened and nothing is likely to happen at least until the Article 50 trigger is pulled at the end of March. Even that is not sure to happen. The Supreme Court is currently examining the government’s right to act alone without parliamentary approval.

INFLATION

A bottoming-out of oil prices and Sterling’s severe depreciation over the last year translate into upward pressure on inflation. Whilst it is highly unlikely that the Bank of England will respond with higher interest rates in the next few months if inflation threatens to rise above 2% investors might begin to price in the expectation of an eventual rate hike.

EXOGENOUS FACTORS

A new US president takes charge next month. The Netherlands elects its next parliament in March and France goes to the presidential polls the following month. These events could have an impact on Britain’s relationship with the wider world not only politically but also commercially.

ISSUES THAT COULD AFFECT THE US ECONOMY

PRESIDENT TRUMP

Investors have persuaded themselves that Donald Trump’s tax cuts and public spending increases will be positive for the economy, inflation, interest rates, and the Dollar. Although the first three of these have yet to be seen, investors have been happy to get on with the fourth. The dollar is the only major currency to have strengthened against Sterling since Election Day. Will Mr. Trump deliver what they are looking for?

FEDERAL RESERVE POLICY

In December 2016, the Fed raised its policy interest rate for only the second time in a decade. The economic forecasts from the meeting indicated three further rate increases in 2017, helping the Dollar ahead. If the three increases were to change to two or four increases this New Year, the Dollar would react accordingly.

CONFIDENCE

The Dow Jones industrial index of 30 industrial shares (the Dow) is a bit of a dinosaur, in that it is weighted by share price rather than by the market values of the companies concerned. Even so, it is widely watched and in the dying weeks of 2016 was at record highs, banging its head on the 20,000 level. An upward break through 20,000 would be positive for confidence. Failure to make that break could have wider negative repercussions.

We will be releasing full technical documentation on how to trade BREXIT 2017.

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HOW WE TRADED BREXIT IN 2016

“In the midst of chaos, there is also opportunity” – Sun Tzu

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Have a beautiful day and an even wonderful week!

Nisha Patel

Live from the Platinum Trading Floor.