Brexit Impacts Pound
Britain has chosen to depart not only from the European Union, but yesterday Ms. May stated unequivocally that Britain would not seek to maintain the customs and tariff arrangements that had been the law under the EU regulations that applied to Britain. What this means, besides the quite obvious trading possibilities, is that Britain will not enjoy the preferential tariff codes on its good exports into the EU nor will it enjoy preferential tariff rates on goods it imports from the EU.
GBP takes a Hit
The chart is dramatically down. From the moment that the tariff union announcement was picked up on our radar screens until now, and likely well into the next week of trading the GBP has lost 1.11% of its value against the USD. That is a lot in FX terms which move around on the order of tenths of percentage points per day.
FTSE Rises about the Brexit
Curiously the FTSE does not express the same pessimism for the British divorce from the tariff union as the currency traders do. Perhaps the stock market traders feel that the divorce will ultimately work in Britain’s favour by unburdening the economy with obligations toward the Eurozone and putting Britain on a firmer foundation from which to undertake its international trading relationships. In any event, the FTSE is continuing with its robust demonstration of strength and determination to profit from the recent falls by placing its capital back into the market for stocks following the falls of the last two months. Today’s trade has the same caveats that all of our stock recommendations of the past week have carried with them: We keep our stops, both take profit and stop loss, tightly placed to the entry points of the trades. (See yesterday’s article for details as to why this is). Entry today at or above 7298 with profit stop order between 7308 – 7355 and our stop loss order between 7297 – 7243.
Sugar going Steady
This trade is a gem because it has been delivering steadily for over a ¼ of a year. We see no obvious fundamental development to alter this trade. Today’s entry is at or below 11.77. This trade is solid enough to extend into the future. In order to do so, widen the stop positions further from the entry point of the trade. This is so because we feel that the directionality is strong enough as not to be stopped out by significant reversals in the trend.