Which GBP pairs will move the most on the Brexit result outcome?

With the Brexit referendum result looming which currencies may move the most against the pound? 22 June 2016.

There's been lots of justifiable/considered talk recently, as well as hype, about the impact of the result impacting on the pound in serious fashion. I can't tell you the outcome of the referendum but I can tell that whatever the result we will see rapid moves in GBP pairs. NSS I hear you cry? lol

But which should move the most I hear you ask? Good question, so let's have a quick look.

Well, GBPUSD will grab the headlines but other prime movers will be GBPJPY, GBPCHF and other safe-haven/risk-affected/commodity currencies. Earlier today in the comments section someone asked me the impact against the Aussie $ and we have to be aware that GBPAUD should move higher on a Remain result on general GBP strength and that in turn should see AUDUSD selling as cross-pair trading ends up in core-pair arbitrage. However losses in that pair would be tempered by risk-on/commodity-led demand for AUD elsewhere. The scenario works in reverse ofc on a Leave outcome.

Similar price actions can be expected in GBPCAD and USDCAD for example but what of EURGBP ? Well, what we don't know is how far any negative euro impact has yet to be factored in. There is little doubt in my mind that the price-range/degree of movement here will play out on core pairs and others related too but the effect may be more muted. Leave would send the pair immediately higher ( GBP weakness) but this should be tempered by the knock-on implications for the Eurozone. On the other hand a vote to Remain will send the pair lower (GBP strength) to be tempered by a relief rally in EURUSD and other euro-pairs.

It's all very confusing I know, and there's no rocket science/experience/algo box that can tell us the precise extent to which all these scenarios will play out but forewarned is forearmed. It will certainly benefit you to cast your net a little wider than usual to be aware of all this potential impact going on.

For those of you still unsure of how cross-pair flows play out then sign up to our ACT course where next week I will be hosting a live 2 hour webinar explaining liquidity, flows, order boards and option expiries in far more detail than I can post here. Ryan will also be hosting his own must-attend session.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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