6-Month Brexit Delay
An agreement has recently been reached between the UK and the European Union for Britain’s official exit to be delayed until October 31.
This will come as welcome news to nearly half of the population who want to remain, and those people who still harbour hopes of a second referendum, but from a forex trading point of view, it is not exactly the best of news.
Implications for the GBP/USD Pair
The GBP/USD pair has been trading sideways for quite some time now, and so news of a Brexit stalemate is only going to increase the uncertainty surrounding the British economy, and subsequently the British pound.
Therefore it is highly likely to continue trading in a sideways trading range with no clear momentum or direction.
You can see from the daily price chart above that the trading range has actually been getting smaller and smaller in recent weeks as the original Brexit leaving date came and went.
Ordinarily this narrowing range would point to a possible breakout situation, and although it may well drop back to around the 1.28 level, it is hard to see the price moving strongly above 1.31 or strongly below 1.28 at the present time because there is unlikely to be any real news to drive the price in either direction in the immediate future.
Other GBP Pairs
The same can be said for many of the other British pound pairs as well.
Pairs such as the GBP/JPY are also starting to look a little weak, but unless there is a major breakthrough regarding the whole Brexit saga, it is hard to see what will drive the price of these pairs significantly higher or lower going forward.
Trading Opportunities
All of this means that from a trading perspective, it is going to continue to be very difficult to make consistent profits trading the British pound pairs because the average daily trading range is likely to remain relatively small, and there is unlikely to be any clear direction in the near future.
So it is probably a better idea to focus on those pairs that currently have a much larger average trading range and have more potential to trend strongly upwards or downwards in the weeks and months ahead.
One such pair is the AUD/NZD pair, for instance, which has been quite volatile in recent months and has some fairly consistent trends if you trade the daily time frame. This is obviously not affected by Brexit, which is exactly what you want right now.
Other good trading candidates that are not directly affected by Brexit include the USD/JPY and the USD/CAD pairs.
Finally, it is worth mentioning that you could also trade other markets that are trending strongly. The Dow Jones and the S&P 500 are always good markets to trade, as indeed are the crude oil markets, but you could also trade some of the cryptocurrencies or some of the other commodities if you don’t want to trade the British pound pairs. There are always plenty of options.
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