Concerns of a hard Brexit after Mrs. May’s comments yesterday and increased perception of imminent interest rate hikes in the US took their toll on Sterling this week. Monday, Cable started the week at 1.29186 to close yesterday at 1.27403, a drop of 1.4% in just 2 days.
The British Prime Minister made it very clear in her statement that migration policy would be at the top of the agenda in negotiating terms for Britain’s exit from the EU. While EU officials have repeatedly stated that free movement of people must be accepted as part of a deal to access the single EU wide market.
These comments added to the market betting on interest rate increases being implemented in the US before year end further strengthened the US dollar. Expectations are high for a hike at December’s FOMC meeting. Bloomberg reports some analysts see a 60% likelihood for a hike in December.
This Friday at 09:30am we may have cause for more volatility as the UK will publish data for Industrial and Manufacturing Production for monthly and yearly figures. Monthly Manufacturing Production is expected to increase by 0.4% compared to last month’s decrease of 0.9%. Monthly Industrial Production is expected unchanged at 0.1%, whereas yearly data should show an increase of 1.3%, down from last month’s 2.1%.
If you feel that GBPUSD will continue to fall after the data then all you need to do is sell GBPUSD with Deal Cancellation protection. This feature allows you to take a position and set a maximum stop loss, which if hit during the first hour, will only cost you the premium you paid to buy Deal Cancellation protection.
Deal Cancellation gives you the option to close a trade, during 1 hour, losing no more than the premium you paid, while allowing you to gain from any positive price movement.
The screenshot below, with the trade screen, shows that to sell £28,000 with a stop loss of €312.51 would cost €19.19 to gain Deal Cancellation protection.
If the market falls from 1.27386 you would be able to close your trade with a profit less the cost of the Deal Cancellation Protection. Let’s say cable declines to 1.26386, your profit would be equal to €250 – €19.19 = €230.81, while your maximum risk for one hour would be €19.19.