News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bearish
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
More View more
Real Time News
  • Join @DanielGMoss's #Webinar at 10:00 PM ET/2:00 AM GMT for his weekly coverage of trading prep for $AUDUSD in the week ahead. Register here: https://t.co/wi1qabrtHJ https://t.co/bmOoBpGlZs
  • $AUDUSD dipping in morning APAC trade following a speech from #RBA Governor Guy Debelle He mentioned that an option possibly being considered for other policy prescriptions is to buy bonds 'further out along the curve' (relatively dovish) https://t.co/JXQktfCrj0 https://t.co/Xbyhuuy5b6
  • RBA's Debelle: 'Mixed' empirical evidence on negative rates, TFF increase is substantial easing of monetary policy -BBG #RBA $AUDUSD
  • RBA's Debelle: Lower #AUD would benefit economy, watching closely. FX intervention not effective in current circumstance -BBG $AUDUSD #RBA
  • RBA Deputy Governor Debelle: Reducing yield target, TFF rate possible policy option. RBA continues to assess other policy options -BBG
  • An economic calendar is a resource that allows traders to learn about important economic information scheduled to be released. Stay up to date on the most important global economic data here: https://t.co/JdvW6HNuqV https://t.co/QwmBEeg3A4
  • Heads Up:🇦🇺 RBA Debelle Speech due at 00:30 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-09-22
  • Top Chart: Haven US Dollar seen struggling vs #ASEAN currencies (SGD, IDR, PHP, MYR) despite risk aversion Bottom: Despite heavy US risk aversion #SP500, capital still flows into #EmergingMarkets, perhaps keeping these currencies afloat Stay tuned for my next ASEAN fundy! https://t.co/foDO6DGGNn
  • The Nikkei 225 fell beneath 23,000 as it moves to the midpoint of its rising channel. Get your #Nikkei market update from @PeterHanksFX here: https://t.co/zqEZiyD0Lm https://t.co/UxHlEM1Iv0
  • As promised⬇️ "#SP500 Teeters on Precipice as Trump Trails Biden in Swing States" https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2020/09/21/SP-500-Teeters-on-Precipice-as-Trump-Trails-Biden-in-Swing-States-.html https://t.co/AsFRCaHL2k
FTSE 100 Analysis: Default Safe-Haven on No-Deal Brexit Risk as Sterling (GBP) Collapses

FTSE 100 Analysis: Default Safe-Haven on No-Deal Brexit Risk as Sterling (GBP) Collapses

2019-07-30 11:00:00
Justin McQueen, Analyst
Share:

FTSE 100 Analysis and News

  • GBP/USD Slumps as Hard Brexit Risks Mount
  • FTSE 100 a Safe Haven?

GBP/USD Slumps as Hard Brexit Risks Mount

Yesterday saw the Pound experience its largest 1-day decline against the US Dollar in 2019, dropping 1.25% with the currency trading at the lowest level since March 2017. This came amid Boris Johnson and his cabinet ministers continuing to show a hardened stance towards the EU with Michael Gove stating that the government are working on the assumption that the EU would not strike a fresh Brexit agreement. Consequently, in light of the plummet seen in GBP, this was to the beneficiary of the FTSE 100, which jumped to fresh 2019 highs.

As mentioned last week, given that Boris Johnson government is unlikely to reduce the current uncertainty and with his rhetoric that he is willing to carry out a no-deal Brexit, the FTSE 100 would stand to outperform on the basis that the weak Pound supports FTSE 100 profitability with 2/3 of the revenue from the top 100 companies generated overseas.

FTSE 100 a Safe Haven?

As Brexit uncertainty continues to weigh on the Pound, it can be argued that the FTSE 100 is a potential safe haven with investors rotating from domestic assets (FTSE 250 or GBP) to more internationally exposed. Since the backend of 2016, the FTSE 100 and the Pound have had a sizeable negative correlation with the correlation becoming increasingly more negative at times when Brexit uncertainty (no-deal Brexit risks) rises. Therefore, showing signs that the default trade on rising hard Brexit risks is a move into the FTSE 100. However, with that said, just like the initial reaction to the Brexit referendum, if the UK were to confirm that they were heading for a no-deal Brexit, it is likely that the Pound and FTSE 100 would head lower.

FTSE 100 Analysis: Default Safe-Haven on No-Deal Brexit Risk as Sterling (GBP) Collapses

FTSE 100 Price Chart: Daily Time Frame (Apr 18 – Jul 19)

FTSE 100 Analysis: Default Safe-Haven on No-Deal Brexit Risk as Sterling (GBP) Collapses

Chart by IG

KEY TRADING RESOURCES:

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES