Boris and Betty: Trading GBP amid political armageddon

Link to Full Piece

Summary…

UK Prime Minister Boris Johnson announced his resignation this morning after another wave of cabinet departures overnight made his position untenable.

He will remain in his post until a new leader is appointed no later than the Conservative Party’s annual conference in October. Parliament is due to break up for summer recess on July 21 so the process may have to be expedited. How long the process takes depends on how many candidates come forward for the role, but it will provide a period of headline risk affecting GBP/USD.

As he continued to lurch from one crisis to another the GBPUSD, (colloquially known as Betty from Cockney rhyming slang for cable – Betty Grable), took a battering.  As the political landscape in the UK deteriorated the currency bore the brunt of the upheaval.  A currency’s value is influenced by more than just economic factors like interest rates and inflation.  Even the most experienced market players can get outflanked by political influence on currency trading.

Knowing how politics works in relation to foreign exchange markets can be useful when it comes to your trading decisions. Countries that have strong political stability are far more attractive to foreign investors.  As such political stability can have a dramatic effect on currency rates. Serious inquiries into government conduct can destabilise the economy and weaken the currency.

This article was written by Ryan Paisey at www.forexlive.com.

Account of the monetary policy meeting of the Governing Council of the European Central Bank held in Amsterdam on Wednesday and Thursday, 8-9 June 2022

As Newsquawk note..

As ever, given the time lag between the announcement and the publication of the accounts, traders will take greater guidance from recent data points and commentary from officials. Furthermore, when it comes to the issue of fragmentation, the ECB carried out an ad-hoc meeting to address the matter and therefore the account will offer little in the way of insight on that front.

Some Key Headlines:

• Most Measures Of Longer-Term Inflation Expectations Appeared To Be Still Broadly Anchored
• It Was Generally Considered That Stagflation Was An Unlikely Outcome
• Inflationary Pressures From Re-Opening In The Tourism Sector, Which Had Been Prominent In The May Figures, Were Likely To Continue In The Coming Months As Tourism Opened Up More Widely
• It Was Necessary To Avoid Gradualism Being Seen As Precluding Interest Rate Steps In Excess Of 25 Basis Points
• Taking The Indirect Effects Of Energy Prices Out Of The Core Inflation Projection Would Result In A 2.0% Projection For Core Inflation In 2024
• A Number Of Members Expressed An Initial Preference For Keeping The Door Open For A Larger Hike At The July Meeting

This article was written by Ryan Paisey at www.forexlive.com.

This article was written by Ryan Paisey at www.forexlive.com.

Full note

Good morning USA traders, hope your day is off to a great start! Here are the top 5 things you need to know for today’s market.

Click below to read the full report and listen to the guys doing the podcast.

5 Things You Need to Know

• European bourses are firmer across the board, Euro Stoxx 50 +1.5%, in a continuation of the constructive APAC handover though action remains choppy.
• Bourses, and US futures, were bolstered amid reports that China is considering USD 220bln of stimulus with unprecedented bond sales, via BBG.
• DXY takes a reprieve and resided sub-107.00 with antipodeans leading on sentiment and GBP bid amid the looming resignation of PM Johnson
• Reports on this dented Gilts, though the complex more broadly was briefly hit on the China stimulus headline
• Senior US State Department Official says no announcement on China tariffs is expected from Secretary of State Blinken at his meeting with China’s Foreign Minister Wang Yi

This article was written by Ryan Paisey at www.forexlive.com.

• S&P Futures continues to look okay for the bulls but in this jittery market where close stops can easily be hit, and mediocre entry prices are exposed to choppy price action, we focus today on targeting a more attractive entry to our Long.
• See 3 trade ideas in the video and understand the technical logic behind the location of the stop loss, the take profit target and the reward vs risk
• Note the 2 price ranges in today’s technical analysis and see how we use them as anchors for our trades. Our video today provides a view and, still, bullish bias, for the Emini, as well as focuses on targeting a more attractive entry to your Long, or where existing Long trades may consider adding to their existing position
• Remember that in trading, and especially in trading futures, there is always a price to pay as we aim to gain a benefit. In this case, the lower entry price for our Long is not just handed to us for free. The risk is that the buy order will not get filled.
• Watch the following video and trade the S&P 500 E-mini Futures (ES) at your own risk

Futher to the above video analysis, on the daily timeframe, watch for the S&P Futures or S&P Index (SPX) during normal trading hours, to possibly close the gap, in the near future, perhaps this week, reaching 3896.50.

S&P 500 Futures Analysis. Close this Gap on the Daily Chart?

Visit ForexLive.com for technical analysis perspectives on futures and more.

This article was written by ForexLive at www.forexlive.com.