Feb 22nd 2016: Boris Extends ‘Brexit’ Fears

• After David Cameron’s marathon EU reform talks, the initial headlines were positive, but it’s always wise to until the secondary analysis of the detail before passing judgement. While holes are being picked in the new EU agreement, a second front emerged in the form of Boris Johnson. Johnson’s backing of the ‘leave’ campaign has triggered a sell-off in the pound and increased the probability of the UK leaving the EU. The pound has recovered some of the morning’s early sell-off, but losses remain.

• The biggest falls are seen on the GBP/ AUD as the Aussie pushes higher this morning.

• The NZD/ USD is rallying in sympathy.

• The US dollar index gapped higher at the open, but is slipping back as we move through the morning.

• The USD/ JPY is rallying as demand for safe havens reduces.

Coming up today: 

• Today we have French flash manufacturing PMI at 08.00, followed by German flash manufacturing at 08.30 and pan European data at 09.00. Corresponding PMI data is released at the same time.

Trade Idea: 

• The EUR/ GBP is off the boil this morning and we’re likely to see further volatility until the end of June until the matter is settled.

• Further downside is highly likely from here and a good way to play this is a LOWER trade predicting that the EUR/ GBP will close below 0.7750 in 14 days for a potential return of 214% if successful.

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