What to expect after Atricle 50 is triggered
AFTER ARTICLE 50
Much of the big bets will have been placed. The real money in trading is made predicting the future, not simply trading on what is now known. Every step closer for the UK striking new trade deals and making inroads to new partners is another nail in the EU’s coffin.
Now the race is on for the UK to prove it can strike better trade deals for the UK and the EU to try and prove that they can’t. This will lead to a simple battle in the FX markets. DO traders believe the GBP or the EUR will be the stronger player in 2 years’ time?
The GBP/USD will be a god indicator. IF the GBP remains above 1.20, even considering the USD may hike rates 3 more times this year, I think the GBP has room to trade as high as 1.40 by the end of the year.
Conversely, even the EU has very little to do to prove its worth, I still believe that the risk of contagion, be this Frexit, Finxit… name another unhappy nation, the risk to the EUR remain on the downside. Many analysts before Brexit pointed to the EUR/USD hitting parity (1.0) and with populist politics hitting more and more EU nations its seems that unlike the UK who has everything to gain the EU has much to lose.
All in all once the Brexit negotiations start the battle for who is going to be the ‘winner’ will be judged by the FX strength of the EUR/GBP and the relative strength of the German Dax, the power house of Europe and the FTSE the clear indication of how the UK and London will fair during this time