Usually on Thursday I start thinking about the title for my weekly analysis. It has to be something catchy, amusing, interesting that will make you click on my post. I had another title in mind related to the JPY and to the inactivity of the BOJ but on Friday night came the agreement between the EU and the UK so I had to find something else.
This agreement that took place in Brussels was a renegotiation between PM Cameron and the other European leaders. Britain will remain in the EU in a special status. In June (most probably) a referendum will take place in Britain and citizens will decide if they want to stay in the EU or not. Banks will certainly be unhappy with a Brexit so you can imagine the pressure.Back to our analysis and trades. I got lucky taking a short on Gbp/Usd on Thursday that I closed on Friday before the agreement. 100 pips in the pocket just before the bounce and I achieved my monthly goal of 2% profit. As of Monday I expect the GBP to get stronger but as soon as the first polls come out, we will see the GBP pairs going up and down. But we have some time to go long before the polls. The latest poll (before the agreement) is as follows: 36% to leave the EU, 34% to stay in the EU and the rest remain undecided.
From the observed pairs the Gbp/Aud was the mover of the week with -263 pips. Interestingly on Wednesday the pair was trading another 250 pips lower but on Thursday and Friday it recovered.
I will try to go long on the GBP pairs and particularly the Gbp/Jpy that will get “some help” from the BOJ. I think the BOJ was waiting on the side for agreement that will, logically, make both the GBP and EUR stronger as of Monday.
We do not expect any important news for the week and the movements will depend on EU-UK agreement evaluations.