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Brexit Weighs on the Pound

Yaron Mazor

The Pound ran into political problems, as the Brexit has stumbled into a disagreement between Northern Ireland politicians who are part of the U.K governing coalition. The Pound remains highly valued, but with plenty of questions shadowing it in the short-term.

Brexit Negotiations Run into Problems

As the Brexit negotiations prove difficult again, the short-term dynamics of the Pound took a wicked turn late on Monday. The Pound is still above the 1.34 level against the U.S Dollar, but trading the British currency today will need a brave heart.

GBP/USD 1H Chart

Northern Ireland politicians have said they will not agree to a Brexit deal unless they get concessions, and it has caused chaos for the Pound in the short-term.

Pound Still Testing High-Water Marks

From a mid-term perspective, the Pound remains near its high-water marks. And patient traders may be tempted to think the Brexit negotiations with the Northern Ireland politicians will eventually work out.

GBP/USD 4H Chart

However, a quick deal may not be possible, and this could cause volatility for the Pound.

Tough Political Questions Ahead for Traders

Traders have a tough political question to ask themselves about their level of optimism regarding Prime Minister May’s ability to get a deal done within her U.K coalition government.

If May scores an eventual deal with her Northern Ireland counterparts, and maintains her power and wins a Brexit deal that will certainly help the Pound, but in the near-term concerns remain.

GBP/USD Daily Chart

In the short term, we believe the Pound may be negative. In the mid-term and long-term, we are unbiased.

Yaron Mazor is a senior analyst at SuperTraderTV.

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This article was originally posted on FX Empire

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