This article was written by Patrick Latchford, CEO of FCA regulated broker Blackwell Global.
Interestingly, Blackwell has recently sent out a note to clients indicating that it will institute a no-new-trades policy tomorrow once voting actually begins.
“The Undecideds”, coming to a cinema near you
The Brexit vote has all the ingredients to make a good film, plenty of characters with unclear motives, passionate topic of debate, human interest stories and sibling rivalry; but whilst the elevator pitch to the studio heads is sketched out, the ending isn’t yet clear. Whatever the outcome I can’t wait to see the finale, I’m thinking a bit like the Godfather, old scores settled, Boris Johnson goes missing (like Jimmy Hoffa) and Michael Gove gets posted to Syria, Farage, well nothing happens to him, we all need a little comedy time after all. I’m actually getting into this synopsis as I write, picture the scene, the votes in and remain has won the day. Somewhere on the banks of the Thames estuary Boris is gingerly climbing out of the boot of a car, flashlights blinding him in the darkness, he’s mumbling at the faceless men behind the lights, “ Tell Dave, it was only business , it was never personal…”
In the trading world it’s all made for a lot of uncertainty, which for speculators and brokers alike is mainly good; we all like a bit of volatility to get people into trading. If you open an account at Blackwell Global, you aren’t doing it to watch an index or currency pair flat line, your opening an account because you want to see some price action, preferably look for trends and then jump in; the average trader makes surprising good and educated decisions about the direction of markets (though sometimes less good decisions about when to close out a trade, though that’s the topic for another day).
But it will be the undecideds who decide on the day, some 16% of the voters that will swing it one way or another. My guess is that, in common with most elections, the undecideds go with the status quo and in the end we’ll remain, by some margin. The bookies certainly think so with odds of 2/7 of us staying and 11/4 leaving, and these odds, unlike the endless rhetoric in the papers, are a much better indicator than pollsters because the bookies are way more sophisticated in their predictions because….their money is on the line, and they don’t like to lose.
In the financial markets, the pound (against dollar or GBPUSD) is trading at 1.4644, up 2% on the day, which is the financial markets equivalent of the odds shortening on a horse that is getting heavily backed; the punters think that the pound will strengthen with ‘Remain’ as the likely conclusion. Like the bookies, traders are playing to win, and whilst there’s plenty that can still effect the outcome, the undecideds will have the fate of Boris J. firmly in their hands……well at least in the film, coming soon.