With the U.K. Parliament set to vote on Theresa May’s latest Brexit deal, any Sterling is definitely the pair should be on the watchlist, especially GBP/NZD for maximum pip potential.
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Fresh Market Headlines & Economic data:
- Sterling plunges after Theresa May’s Brexit deal suffers surprise legal setback
- UK economy stalls despite strong January
- In Q4 2018, French payroll employment accelerated slightly in the private business sector and remained almost stable in public service
- Sentiment among large Japanese companies plunges in 1Q 2019
- NAB survey shows decline in business confidence in Australia
- Australia home loans decline -2.6%
Upcoming Potential Catalysts on the Forex Calendar:
- U.K. Parliament vote on Brexit (tentative)
- New Zealand Food Price Index at 10:45 pm GMT
- Japan PPI & Key Machinery Orders at 11:50 pm GMT
- Australia Westpac Consumer Confidence at 12:30 am GMT (Mar. 13)
What to Watch: GBP/NZD
With a key Brexit debate and vote going on as we write this (you can watch it live here), Sterling is the currency of the day. And as mentioned at the top, GBP/NZD is probably the pair to watch as it would likely yield the most pips given it’s ATR of over 200 pips per day, probably the highest among major or minor currency pairs.
We’re not gonna argue for a bull or bear case because while Theresa May’s Brexit deal is likely to be rejected, the reaction in Sterling could go either way on a “buy-the-rumor, sell-the-news” scenario or an actual sell off after the results are nearly fully counted. There’s also the possibility of it getting approved, and while it’s at the very, very far reaches of probable, it’s scenario to consider.
So, for today it’s probably best to be reactive, but if you wanna put orders up before hand, a straddle strategy is something to consider IF you trade small and with a wide stop. For GBP/NZD, staying outside of the 200 pip daily ATR is prudent, and with the next resistance area around 1.95 and the next support area around 1.87, this still gives a solid return-on-risk potential of around 2:1 both ways.
If you’re lucky enough for the pair to go your way, you can always scale in and trail your stop if the situation makes sense. Whatever you decided to do, remember to keep risk management on you mind first, especially with big events like this.