Brexit is one of the hottest topics recently. Well, I can’t stay away and have to share my opinion. I am not sure how many of you know what is actually the European Union and why it was created. So, to understand the reasons for the political crisis in Europe (yeah, in some way we can consider it as a political crisis) let’s come back to history.
The idea of EU creation belongs to former Prime Minister of UK, Winston Churchill. The irony of life, isn’t it? Mr. Churchill saw the EU as a way to avoid war conflicts. It wasn’t much accepted by other countries. But later Germany and France picked up this idea and changed its mission. They decided the EU is the best way to make trade deals more easy, in other words, it gave them the opportunity to sell their goods more easy and on better conditions. Do you remember what happened when EUR was established? – All countries started from zero, not depending on their GDP. Yeah, that’s the reason why Greece, Italy, and Spain have lots of problems now – deficit, huge debt, etc. But who cares? I am not sure if there is a way to avoid default.
Coming movements of GBP depend on how negotiations will go. But over the long-term UK is the winner in this game. The country will have the opportunity to negotiate with all other countries in a world directly and take decisions on trade deals. Another plus – the UK will avoid all negative impacts of Italian problems etc. So, I think as a result Brexit will have a positive influence on the UK economy and help to grow its economy.
Technically speaking, we have to expect a bit of consolidation near current levels and zig-zag moves. But I see good opportunities for swing traders as well. The market has to test 1.2500 as it was previously important resistance and consolidation area + important psychological number. From this point, we can see ABC formation. So, I will be targeting 1.3700. After that, we have to see one more leg down to form double bottom near 1.2000. And finally impulsive move to 1.5500. This is a long-term technical view based on weekly and monthly charts. We have to take into account fundamentals and keep an eye on it as well. Sure, I will watch GBP and add it to my portfolio in managed accounts.
Wishing you a great week!
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