(CORE) POSITION TRADE
TRADE REFERENCE: CP22
TRADE DIRECTION: LONG
TRADE STARTED: 6th August 2020
EXPECTED TRADING PERIOD: Very Long-Term (Thru 2021 – 2022)
DATE LATEST VIDEO UPDATE: 1st February 2022
VIDEO UPDATE LINK: CP22gbpchf01052022
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%
Q1 2022 REVIEW:
I have moved my GLOBAL LIMIT in from 1.5580 to 1.3400.
Whilst this is a huge pullback in objective this has NOT affected my overall conviction with this pair although, we do need to see an improvement in the euro area to push this pair higher. The geograhical proximity trade has really played its part with this pair over recent times.
I do still believe that this pair of all the GBP crosses has the most to gainin comparitive pricing moving forward.
CHART UPDATE: 01.05.2022 from 5 Minute ZOOM update: