Morning Report: 07.30 London
- This morning, the British pound has opened with a gap lower as Brexit opinion polls show an ever narrowing public opinion. A ‘leave’ outcome has moved from being unlikely to being a possibility, at least going by the polls. The betting markets are less dramatic, though reflecting the fact that populations typically vote with the status quo. The current betting odds imply a 67% chance for a ‘remain’ vote and 33% chance for a ‘leave’ vote. As we saw with the UK general election, opinion polls and betting markets are not infallible. The pound is softer across the board this morning, especially against the US dollar and euro.
- The big mover this morning is the yen which is attracting funds on the ‘risk off’ theme. Some have attributed this to Brexit fears, but it’s more likely to be part of a general switch in line with recent day’s trading.
- The US dollar is nudging back after two days of gains and corresponding selling in oil prices.
Coming up today:
- Coming up today we have German Buba president Weidmann speaking at 08.00.
Trade Idea:
- The EUR/GBP has rallied sharply last week as Brexit chances increase. However, there could be an opportunity for a value bet trading in the opposite direction.
- As the betting odds imply, despite advances, a Brexit vote is still by far the less probable outcome. Secondly, should the UK vote to leave, it is not good news for the euro either. There is a risk of triggering similar referendums in other countries such as the Netherlands.
- A good way to play this is an ONE TOUCH trade predicting that the EUR/GBP will touch 0.78 before June 24th for a potential return of 317%.
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