Risk-off ahead of Theresa May speech, but GBP rebounds

The GBP rebounded somewhat from its Monday low and currently trades around 1.2120. This is despite a broad risk-off sentiment ahead of Theresa May's speech at 11:45am London time today: Gold and the JPY are up, equities and the USD are down from yesterday. Market participants expect May to announce that her government will favour a "hard" Brexit rather than a "half in, half out" agreement.

Cable is still trading close to its lows with negative momentum intact. GBP futures positions are still deep in negative territory but less extreme than in mid-2016, suggesting that the fall in the GBP might well continue. Hard Brexit + Trump = GBPUSD approaching parity? That seems extreme at the moment, but it's something I consider.

With this much uncertainty in the markets but no real story to play just yet I feel comfortable on the sidelines. Waiting for ECB on Thursday and, more importantly, to finally see some actions by Trump and his cabinet beginning early next week after his inauguration on Friday.

Open positions as of 17/01/2017 9:00am CET: Flat

Realized YTD return: +0.7% from 2 trades

GBP down as market braces itself for hard Brexit

I've lost conviction in my EURUSD long trade which I opened at 1.0646. I still think the pair has potential to go up to 1.07-.08 but there's no real momentum, so I'm looking for opportunities elsewhere. Closed trade at 1.0608 to realize 0.36% loss.

Sterling got pummeled during the Asian trading session as market participants are pricing in the possibility of a hard Brexit ahead of Theresa May's speech on Tuesday. I'm seeing a low of 1.1986 on BBG but with GBP short momentum still intact it wouldn't be surprising to see cable go for its "flash crash" low in the 1.1752-1.1841 range. (When it comes to flash crashes, data become somewhat unreliable. Depending on which data feed you're using and which brokers/banks are contributing prices to the feed, you will see different lows. Thin liquidity is another problem with quoted prices recorded during flash crash periods.)

Open positions as of 16/01/2017 9:00am CET: Flat

Realized YTD return: +0.7% from 2 trades