Market News & Analysis

Top Story

Sterling dazed but unfazed by Cox’s bombshell

Tuesday brings another reminder to traders that Brexit complacency is inadvisable.

Short-term sterling implied volatility has surged to end-January highs, massively destabilising the spot. And the pound’s volatile day will continue. Tonight’s vote is set to go ahead as planned. Perhaps the “legally-binding” aspect of Brussels’ new undertakings lulled some participants into a feeling of greater security despite past experience. In the event, the long-awaited opinion from Britain’s most powerful politician—on Monday—Attorney General Geoffrey Cox—was a bombshell. The backstop provides "no internationally lawful means of exiting".

Worth noting:

  • Options data show far lower expectation of wild swings beyond the one-month mark. This means the market remains fairly relaxed on Brexit prospects in coming months; strongly backing the notion of a delayed Brexit; somehow, when the miasma of uncertainty thins
  • Verbal comments from Cox in the Commons drew further poison from his written opinion, lifting sterling off lows. For instance: “Ultimately the UK has a good right to withdraw from any treaty as a sovereign state”

But expect trading to be more circumspect into the 7.00pm GMT vote on the government’s Brexit deal. Even at its ebullient best, cable again respected 20th September’s $1.32982 high as resistance. Tuesday’s top is $1.3264, below Monday’s. Still, a wide up-channel confirmed in December is intact; more implied support. Monday’s $1.2960s lows are also untested so far. Note $1.2968 on 22nd Feb too. If all these go, mayhem of greater intensity may lie below.

Price chart: GBP/USD – hourly [12/03/2019 14:31:05]

Source: City Index


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.