Monday June 20, 2016 - 15:52:20 GMT
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Reaction Risk to Brexit Outcome is Not Symmetrical
I wrote an article recently entitled, Where is Sterling Headed? In the article is said the only thing I am sure of is that the currency will gap in one direction or the other once the EU referendum result is known.
However, the reaction is not symmetrical. As I noted, markets tend to react most when there is a surprise outcome, whether it be an economic release, central bank meeting or an historic event such as the Brexit vote. Given the way sterling and equities have taken a u-turn and are trading sharply higher, the surprise would be a vote for Brexit. One could say this is a re-pricing of risk as sentiment has swung to a vote to Remain despite polls that show a neck and neck race.
As we saw with the recent UK election, polls do not always tell the story and at the risk of being ;politically incorrect, there is an old saying that goes like this: It ain't over till the fat lady sings This means do not assume to know the result of a key event that is still going on.
Whatever the case, the surprise now would be for a vote for Brexit and this is where the greater risk lies in all markets once the result is known. See below for levels to watch in sterling and to participate in our final poll.
Brexit Poll: Where is Sterling Headed?
Jay Meisler, founder
Global Traders Association
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