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.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • RT @economics: Oval Office scuffles, tariff threats, and diminished expectations: An inside look at how Trump’s trade war went from method…
  • We still don't know if there are auto tariffs coming from the White House. The deadline for a decision was Thursday. Crickets
  • $EURUSD Daily Pivot Points: S3: 1.0936 S2: 1.0974 S1: 1.0998 R1: 1.1037 R2: 1.1052 R3: 1.109 https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • The $CAD continues to take a hit against the US Dollar after USD/CAD very nearly experienced a major long-term support-break at the end of October. Get your USD/CAD market update from @PaulRobinsonFX here:https://t.co/qeWFmoLwKt https://t.co/G0o4uIV2k7
  • US Yield Curves Update: 2Yr/5Yr: 3.8 2Yr/10Yr: 22.2 2Yr/30Yr: 69.5 5Yr/10Yr: 18.6
  • Forex Update: As of 21:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.51% 🇳🇿NZD: 0.34% 🇪🇺EUR: 0.28% 🇬🇧GBP: 0.17% 🇨🇭CHF: -0.17% 🇯🇵JPY: -0.32% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/Wdqln8EdxW
  • Commodities Update: As of 21:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.12% Gold: -0.29% Silver: -0.39% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/JRPr0hEqpC
  • $NZDJPY: The back-and-forth we have seen since the summer bottom could be taking on a large bear-flag, but that won’t be validated until the lower threshold is broken. Get your market update from @PaulRobinsonFX here:https://t.co/xBXm7PWHhn https://t.co/j4JNtpycsU
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.55%, while traders in France 40 are at opposite extremes with 86.01%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/SWn7XmGR9s
  • $USDJPY Daily Pivot Points: S3: 108.72 S2: 108.77 S1: 108.8 R1: 108.85 R2: 108.87 R3: 108.92 https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
British Pound Currency Volatility Could Collapse from Brexit Can-Kicking

British Pound Currency Volatility Could Collapse from Brexit Can-Kicking

2019-04-11 21:30:00
Rich Dvorak, Junior Analyst
Share:

GBPUSD IMPLIED VOLATILITY – TALKING POINTS

  • GBPUSD implied volatility gauges cratered after the latest Brexit development is said to push back the UK's departure deadline from April 12 to October 31
  • Reduced Brexit uncertainty may limit future British Pound price action in response to lower downside risk, but could present range-trading opportunities
  • Download the free DailyFX Q2 British Pound Forecast for comprehensive GBP outlook

GBPUSD overnight implied volatility took a nosedive from 12.7 percent yesterday to a mere 7.6 percent today in response to the latest Brexit developments. The move lower in anticipated British Pound price action likely follows the reduced probability of no-deal Brexit after EUCO President Donald Tusk and European Union leaders agreed to delay the UK’s departure for a second time.

FOREX MARKET IMPLIED VOLATILITIES AND TRADING RANGES

Forex Market Implied Volatility and Trading Ranges for GBP, USD, EUR, JPY, CAD, AUD, NZD, CHFCurrency Market Implied Volatility GBPUSD, EURUSD, USDJPY, USDCAD, AUDUSD, NZDUSD, USDCHF

Prior to the EUCO’s offer to extend the Brexit deadline again, the UK was slated to sever itself from the EU on April 12 without a deal following British MPs rejection of Theresa May’s Withdrawal Agreement three separate times.

Check out this Brexit Timeline for a chronological list of events surrounding the UK’s withdrawal from the EU and how negations have affected markets.

Consequently, the ongoing impasse in the House of Commons increased the risk of a no-deal, ‘hard’ Brexit which bid up Sterling implied volatility measures. Now that British Parliament has until October 31 to decide the next direction of Brexit, currency option traders are no longer expecting significant price swings in the near future which is expressed by GBPUSD 1-week implied volatility plunging to its lowest level since December 2018.

GBPUSD IMPLIED VOLATILITY PRICE CHART: DAILY TIME FRAME (OCTOBER 01, 2018 TO APRIL 11, 2019)

GBPUSD Currency Implied Volatility Price Chart Reactions to latest Brexit developments

Implied volatility is an indirect variable derived from currency option contracts and is often viewed as a quantitative measure of hedging costs. With less uncertainty, hedging costs tend to fall as well considering the reduced level of risk. Consequently, the 6-month Brexit delay appears to have significantly reduced the risk of a major move in GBPUSD. However, this could in turn suggest that GBPUSD may trade in more established ranges instead of daily Brexit headlines regularly threatening sudden swells that carry the risk of developing into breakouts.

GBPUSD PRICE CHART: WEEKLY TIME FRAME (JUNE 26, 2016 TO APRIL 11, 2019)

GBPUSD Price Chart Currency Technical Analysis

According to the derived 7-month implied volatility which encompasses the new October 31 Brexit deadline, GBPUSD will likely trade within a range of 1.2333 and 1.3843 over the next 7 months. This implied trading range aligns closely with the 76.4 percent and 23.6 percent Fibonacci retracement lines drawn from the low in October 2016 and high in April 2018 - levels that could also provide technical support and resistance. Although, spot prices could continue to coil between rising and falling trendlines shown above while the 61.8 percent and 38.2 percent Fibs may serve as other areas of confluence.

GBPUSD TRADER SENTIMENT

GBPUSD Price Chart British Pound Trader Sentiment Client Positioning

Check out IG’s Client Sentiment here for more detail on the bullish and bearish biases of EURUSD, GBPUSD, USDJPY, Gold, Bitcoin and S&P500.

The latest client positioning data from IG shows that 69.0 percent of GBPUSD traders are net-long with the ratio of traders long to short at 2.23 to 1. According to the data, the number of traders net-long is 3.9 percent lower than yesterday but 14.5 percent higher than last week. Similarly, the number of traders net-short is 0.5 percent higher than yesterday and 15.7 percent lower than last week.

TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

- Written by Rich Dvorak, Junior Analyst for DailyFX

- Follow @RichDvorakFX on Twitter

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

DISCLOSURES

News & Analysis at your fingertips.