Pound sterling and Brexit: the expectation of the week


This week for traders and investors is focused on attracting the situation of the British currency. A marked decline of the pound sterling to the beginning of a difficult week for the representatives of the market will be a serious test of the “strength”. On this basis, financial analysts and Trade-24 marketing department decided to analyze all the information about the key events of this week, which may affect the value of the British pound. For the comfort reading of this material, we decided to highlight key points and developments, that can create quite serious volatility in the world markets.

Speech of the Bank of England Governor Mark Carney (Monday, 18-45 on GMT)

Approaching the first point of departure is the speech chairman of the main bank regulator of the United Kingdom, which will take place on Monday, January 16 at 18-45 GMT. Also from the beginning of the work of the London Stock Exchange, the pound made a fall to around $ 1.20 against the US dollar.

BoE governor Mark Carney

Investors argue, that raising fears about the implementation of the “hard” version Brexit, as well as deciding on the break with the single European market makes traders and analysts assume increased volatility. However, a spokesman for the Department of the stock of the National Bank of Australia Ray Attrill has commented to Financial Times, that market’s idea of “soft versus hard Brexit option is redundant, since the question rather of how the second option will be implemented quickly.” He also says, that the movement of the market and the decline of the pound to the level of “flash crash” in October last year, will not guard against a possible decline in prices, as well as the ability to cut off the bearish trend will be dominative the whole week.

Statement by the PM of Great Britain Theresa May (Tuesday, pre – on 11-00 GMT)

On Tuesday, the pound may get painful blow after the speech of the head of the British government Theresa May about the implementation of more “hard scenario” of UK withdrawal from the EU.

British PM Theresa May

Also, after the Carney’s speech, economists and market analysts expect the emergence of a stronger and a new gap on the price of goods. Chief economist of Standard Chartered Marios Maratheftis stated in an interview for Bloomberg, that the British currency will not be able to resist after two such speeches and “will have to continue to drop in price”.

At the same time, strategist of consultancy 4Cast-RGE Ian Johnson emphasizes, that it is not so terrible it is probable rigid head of the government. According to his words by Financial Times, such terrible rumors were dismissed media representatives “[It is] a bit like the monster behind the door — tomorrow’s speech may not be quite so frightening when we hear it”. According to the strategist, a good chance “to be a tentative buyer of sterling at these levels”, if it is sticking on the basic rules of risk management.

Unemployment, basic sales and inaugurated Trump (Wednesday-Friday)

The additional financial burden for trading can be provided by the publication of a number of reports and data. Among these are  the number of applications for unemployment for December, a report of basic sales for December and the report on the consumer price index. The economists group of Lloyds are sure, that the political statements of May and made publically financial strategy of Mark Carney will have no impact on the pound sterling, if the data on these indicators are going to give the pound “chance” for jump out of the gap, but also to raise the level of resistance in the EUR/USD pair to the level of 1,211. Otherwise, the fall below 1,190 is considered inevitable.

45th US President Donald J. Trump

However, many financiers and market analysts expect the inauguration of the 45th President of USA Donald Trump. The main reason stants by well-known situation with the Mexican peso, which has occurred after the press conference of US President-elect. A number of remarks and comments of Donald Trump led to the few percent drop in the price of currency. Also it had made the falldown of stocks of pharmacological and biotechnology companies. Also, the future leader of the USA said,  that his administration would be ready to conclude a comprehensive agreement with the British government on several issues in cause of Brexit. That’s why, the experts will be expecting the comments of the US President with extreme care.

Finally, the fact is, that the European markets and banking institutions are preparing for a tough one Brexit. As the FT reports, according to its sources of the ECB, it will be stipulated the “replacement” strategy, which regards to the UK in the case of “hard” Brexit realization. According to analysts and Trade-24 marketing dpt., traders and investors should carefully listen to the solutions without creating panic and look for alternate investment options, if the pound is not be able to stay on the psychological mark of 1,195.


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