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Great Britain began her journey alone
The British prime minister Theresa May officially invoked Article 50 of the Lisbon Treaty, thus giving start leaving the country by the European Union. Today the Prime Minister will deliver a letter to the European Council, which formally begin the Brexit process, which, in turn, can take up to two years time.
As a result, the GBP this morning yields around 0.3% against the USD and the EUR.
Sterling: trading ideas on the activation of Article 50
That said, it’s time to figure out how to trade and how to position yourself on the Forex market riding on the news of the activation of Article 50.
The first way is to sell the pound before the mass of profit taking, but it could be too late.
The pound dollar exchange rate is currently down of 0.50%, while the euro sterling is 0.37% climb. Some may decide to wait until the event passes, on the assumption that the bearish movements of the pound will be more limited than expected. But the moment of the profits could be short-lived and everything could quickly turn into quick and aggressive reversal.
The second point for positioning is wait for the market to settle down after the initial movement and buy GBP / USD in view of a short recovery, as many economists and traders are convinced that the final output of the UK from the EU is still 18 months away.
The third option is to wait an hour or two, let the market digest the announcement and ride the trend that transpire, given that this is likely to continue throughout the US session and the Asian session tomorrow.
It is important to remember that the GBP / USD may be strictly true cross and correlated with the trend, and movements related to such events can last for days – so, the smartest way to position it seems, as it often is, to wait.