(This is an excerpt from an article I originally published on Seeking Alpha on September 25, 2016. Click here to read the entire piece.)
Source: UK Government
Nothing shows better the edginess of traders than a quick trigger reaction to rumored news.
On Friday, September 16 rumors ripped through the news headlines that the UK’s Chancellor of the Exchequer, Philip Hammond, is willing to implement post-Brexit constraints on immigration at the cost of losing access to the European Union (EU) market. The British pound (FXB) promptly sold off on the rumor. The sell-off inflicted notable technical damage across sterling pairs. In nearly one swipe, the previous gains from good economic news withered away.
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The reaction in markets may be too hasty because Hammond has previously insisted that he can effectively maintain access to the EU market despite Brexit. {snip}
As nerves cool down, I suspect the British pound will reverse Friday’s loss in due time and perhaps even resume its previous momentum. {snip}
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Source for charts: FreeStockCharts.com
Be careful out there!
Full disclosure: net long the British pound
(This is an excerpt from an article I originally published on Seeking Alpha on September 25, 2016. Click here to read the entire piece.)