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GBP/USD Braced for Highest Volatility Since EU Referendum, Eyes on UK General Election

GBP/USD Braced for Highest Volatility Since EU Referendum, Eyes on UK General Election

2019-12-12 11:00:00
Justin McQueen, Analyst
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Currency Volatility GBP Talking Points

  • GBP Expected to be the Most Volatile Currency
  • Overnight Implied Volatility at the Highest Since EU Referendum

UK GENERAL ELECTION PREVIEW

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GBP/USD Braced for Highest Volatility Since EU Referendum, Eyes on UK General Election

Source: Refinitiv

GBP Expected to be the Most Volatile Currency

Unsurprisingly, given the UK general election, the Pound is expected to be the most volatile currency with overnight implied vols at the highest level since the EU referendum, far surpassing that of the 2017 general election. First indications of the election will be signalled by the exit poll at 2200GMT and thus we expect this to generate the most volatility in the Pound. That said, greater clarity on the election result will be likely known by 0500GMT as over 80% of constituencies would have declared their results by then.

GBP/USD Braced for Highest Volatility Since EU Referendum, Eyes on UK General Election

*Daily Range is based on a 68% probability

GBP/USD Price Chart: Daily Time Frame: (May 2018 – Dec 2019)

GBP/USD Braced for Highest Volatility Since EU Referendum, Eyes on UK General Election

Source: IG Charts

GBP/USD MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 0% -17% -7%
Weekly -7% 9% -2%
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EUR/GBP Price Chart: Daily Time Frame (Oct 2016 – Dec 2019)

GBP/USD Braced for Highest Volatility Since EU Referendum, Eyes on UK General Election

Source: IG Charts

GBP/JPY Price Chart: Daily Time Frame (Sep 2017 – Dec 2019)

GBP/USD Braced for Highest Volatility Since EU Referendum, Eyes on UK General Election

Source: IG Charts

--- Written by Justin McQueen, Market Analyst

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

Follow Justin on Twitter @JMcQueenFX

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