1 C
New York
Saturday, March 6, 2021

Pound Traders See Brexit Risk Rising at the Time of EU Summit

Must read

Democrats advance Biden’s $1.9 trillion COVID-19 bill in marathon Senate session

Coronavirus12 minutes ago (Mar 06, 2021 01:30AM ET) ...

Pope Francis holds historic meeting with Iraq’s top Shi’ite cleric

World17 minutes ago (Mar 06, 2021 01:25AM ET) ...

Which valuation ratios can help identify the best auto stocks

The automobile sector is one of the largest sectors in terms of revenue and is considered the bellwether of both consumer demand and the...
imageForex25 minutes ago (Sep 07, 2020 07:18AM ET)

(C) Reuters. Pound Traders See Brexit Risk Rising at the Time of EU Summit

(Bloomberg) — The currency options market is betting that trade talks between the U.K. and the European Union will go down to the wire, which leaves room for outperformance of volatility gauges spread over different tenors.

Sterling’s volatility surface against both the dollar and the euro as well as risk reversals show there is little panic over immediate maturities stretching from one week to a month, but climb thereafter in time for a key European Union summit.

While the next round of talks between the two sides gets under way Monday, there is little indication either side will give way on fishing rights. The EU wants to keep the access it has to U.K. waters, while Britain wants reduced access and make it conditional on regular negotiations. If the history of Brexit negotiations is any guide, this one will go down to the wire. That would imply that, as things currently stand, the first climax will be set for Oct. 15-16.

Any failure to find a solution in time for the October meeting won’t prove fatal for the pound as the European Council meets again on December 10-11. Political posturing between the U.K. and the EU has never been in short supply in the past, and there is no reason to believe that this will suddenly change.

All of which suggest that implied volatility that stretches beyond a two-month time frame will outperform near-dated gauges.

  • NOTE: Ven Ram is a currency and rates strategist for Bloomberg’s Markets Live. The observations are his own and not intended as investment advice. For more market analysis, see the MLIV blog

(C)2020 Bloomberg L.P.

Pound Traders See Brexit Risk Rising at the Time of EU Summit

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

- Advertisement -

Latest article

Democrats advance Biden’s $1.9 trillion COVID-19 bill in marathon Senate session

Coronavirus12 minutes ago (Mar 06, 2021 01:30AM ET) ...

Pope Francis holds historic meeting with Iraq’s top Shi’ite cleric

World17 minutes ago (Mar 06, 2021 01:25AM ET) ...

Which valuation ratios can help identify the best auto stocks

The automobile sector is one of the largest sectors in terms of revenue and is considered the bellwether of both consumer demand and the...

Merck says study shows COVID-19 drug causes quick reduction in virus

Coronavirus27 minutes ago (Mar 06, 2021 01:15AM ET) ...