June 30th 2016: Pound Trickles Lower After Stable Day

• This morning, the British pound is trickling lower, but these losses appear to be ‘normal’ and in line with a typical day’s trading for global currencies. While the last two days have brought stability, we still have some way to go to make back the Brexit losses.

• The pound is not actually the worse performer this morning, the badge of honour falls to the Australian and New Zealand dollar.

• The main risk barometer of the Japanese yen is slightly higher, while the US dollar index is posting solid gains.

• Today we have German unemployment change at 08.55.
• This is followed by UK current account and final GDP at 09.30.
• Following this, we have European CPI flash estimate.
• At 12.30, we get the release of ECB monetary policy meeting account.
• From 13.30, we switch to North America for Canadian GDP and US unemployment claims.
• Then at 14.45, we have Chicago PMI.
• A big highlight will be BOE governor Carney speaking at 16.00.
• FOMC member Bullard speaks at 18.30.

Trade Idea: 

• The pound has steadied but has hardly made a resounding recovery. Some argue that the pound needs to fall further if it is to really drive home a competitive exchange rate advantage for the UK. Indeed, the IMF said that sterling was 12-18% overvalued before Brexit. We haven’t fallen this far yet, so a further downside is possible.

• A good way to play this is a LOWER trade predicting that the GBP/JPY will close below 136.00 in 35 days for a potential return of 156%.

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