Let’s tackle the biggest story that the markets will be spinning on for the next few weeks…(besides the “will they or won’t they” story for the June FOMC meeting)
The shift in the story has really taken hold with the polling data clearly favoring the “stay in the EU” vote. This keeps GBP buyers looking for more upside and more likely to buy into retracements.
The “purdah rules” for UK government officials (essentially a gag order) start this Friday. This won’t quiet the media and actually could trigger more volatility since it’s in their interest to keep the story going and interesting.
The GBP buys are actually more vulnerable. And I don’t mean the more entrenched long positions built over the past few weeks…rather the more recent longs that will pile in on the latest polling data.
The slightest shift towards “leave” could trigger a quick and significant long squeeze…I see it as a correction and opportunity however since that GBP is so strong, it’s especially vulnerable within these last few weeks before the June 23 vote.
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