(CORE) POSITION TRADE
TRADE REFERENCE: CP22
TRADE DIRECTION: LONG
TRADE STARTED: 6th August 2020
EXPECTED TRADING PERIOD: Very Long-Term (Thru 2021 – 2024)
REASONS and THOUGHTS BEHIND THE TRADE:
This CORE POSITION has been converted from a, in reality a CORE POSITION BREXIT TRADE into a CORE POSITION INVESTOR TRADE.
As mentioned in a brief updated blog of today’s date I am looking ahead into 2021 and this particular pair in my opinion has a big move lower ahead as the UK BREXIT’S the EUROPEAN UNION.
Taking a quick step backwards, the GBP saw severe weakness due to the EU referendum in June 2016, plus BREXIT negotiations and added to this the rather fragile political environment when power switched from David Cameron to Theresa May.
Current Prime Minister, Boris Johnson won a strong election victory last year, giving the worst election performance since the war years on the Jeremy Corbyn led Labour Party. Johnson has a huge mandate and is single-minded to deliver BREXIT this year despite the EU wanting more time to agree a compromised exit.
This pair inverts with the EUR/GBP. It is therefore an attractive pair to trade given my longer-term bearish view vis-à-vis the EUR/GBP and when added to my views on the GBP in general this pair has an excellent opportunity to climb back to pre-BREXIT highs without too many issues.
The SNB controls CHF strength very closely through the EUR/CHF and any CHF selling spills over into other CHF crosses. This action by the SNB also supports this trade on the long side.
Central Bank interest rates:
Current BOE rate: 0.10%
Current SNB rate: -0.75%
PERFORMANCE TO DATE:
EXISTING LIVE and LIMIT ORDERS: