Chart of the day: Blame it on Brexit
This weekend British Prime Minister Theresa May told us that negotiations to leave the European Union would start no later than the end of March 2017. Exchange rate between the pound and the US dollar dipped a little bit again on the news, though managed to hold above July’s low at US$1.28. From a record high during the referendum week, volumes have dwindled and both observed and implied volatility collapsed. So has the nine-week moving average and a massive, bearish Ichimoku cloud continues to bear down. However, having spent the third quarter of 2016 between US$1.28 and US$1.35, momentum is neutral. Gaps on the way down also hint at potential overconfidence in those looking to sell sterling against the dollar; we would suggest a more cautious approach.
Nicole Elliott is a technical analyst