HFM information and reviews
HFM
96%
Octa information and reviews
Octa
94%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%

Trading EURGBP on Brexit Uncertainty


Trading the EURGBP during Brexit Uncertainty: A Case Study

Written by Nikola Grozdanovic, FXTM Senior Staff Writer


Ask most established currency pair traders to pick between fundamental and technical analysis, and you’ll often get a lengthy monologue describing the benefits of both. This is because traders who’ve been around the currency market block know that a healthy mix of both types of analysis is the way to go. Just like in every healthy relationship, each have their important roles to play – and in this article, we’ll zero in on the role fundamental analysis plays. Specifically, we’ll be looking at an FXTM Invest Strategy Manager’s trading of the EURGBP currency pair in late September and early October as a case study.

FXTM Invest, for those unaware of the programme, is a copy trading feature that allows investors to automatically copy suitable forex traders and their strategies. Those they copy are called Strategy Managers. One of the more useful and interesting aspects of FXTM Invest is the sheer amount of insight that investors can get into the 2000+ Strategy Managers on offer; each manager has his or her own page that goes into great visual detail about their trading history, style and statistics. Through a trading service such as this, a potential investor can gain an understanding of a strategy manager’s trading pattern on a certain instrument – and by correlating it with world events, they can make sense of a manager’s thought process which can be a make-it-or-break-it decision if they’re considering following them.

FXTM Invest Case Study: OnePlus87 & the EURGBP.


Trading under the nickname of ‘OnePlus87’, this Strategy Manager has a distinctly recognizable pattern when it comes to trading the EURGBP currency pair in September and October. But, before we get into that, let’s see what actually happened to EURGBP recently – and more importantly, why it happened.

The central theme of any discussion that involves the pairing of Pound Sterling is undoubtedly Brexit. Ever since the referendum, the Pound has been on shaky ground, stirring political upheaval within PM Theresa May’s cabinet and putting a major Eurozone spotlight on the UK internationally. The biggest recent Brexit-related event was the informal summit held at Salzburg on the 20th of September, where Theresa May laid out her Chequers plan for a Brexit deal to EU heads Donald Tusk (President of the European Council) and Jean-Claude Juncker (President of the European Commission).

Needless to say, it didn’t go down well. Tusk, Juncker and virtually all the EU heads said the plan would not work and May flew back to London, defeated – certainly not looking forward to all the “I told you so’s” from her domestic critics. What this did to the EURGBP on the price chart is give it a violent upward swing the very next day. All of a sudden, a ‘no-deal’ Brexit looked more probable, which weakened the Pound, making EURGBP shoot up by 1.2% (from 0.88 to a cat’s whisker under 0.90). But it’s important to consider other factors beyond the ones making the biggest headlines when trading currencies. This is exactly what OnePlus87 has done.

Despite the sharp spike, EURGBP has created a relatively steady downtrend ever since September 21st. This shows that the Pound has actually shown resilience despite continued Brexit woes, or that there’s been some loss of confidence in the Euro. Actually, both are true – which is why on the 10th of October, the currency pair finds itself around the 0.87 mark, nearly 3% down since the fallout from Salzburg. Economic data – which includes retail sales, construction projects and manufacturing – were surprisingly strong for the UK by the end of August, and this resilience has shown in 0.7% GDP growth for the economy in what looks like the best-looking quarter for the country since the Brexit referendum.

More importantly, the Euro has been suffering due to drama over the Italian budget. Fears over Italy’s upcoming budget proposal exceeding limits have made the Euro less attractive – which has quite clearly weakened the Eurozone currency.

By looking at OnePlus87’s Trading Review on their Strategy Manager page, we see that in September and October they kept their positions open for long stretches of time on the EURGBP and only ever went in one direction when they decided to close: sell. We also see that they’ve been very profitable in these cases. Considering what we know from the events and data in late September and October, this tells us that OnePlus87 has learned to not give too much credence to volatile upswings whenever some negative Brexit sentiment occurs (such as the Salzburg summit) but to practice patience, discipline and follow other news – including economic data from the UK and politics in other countries that can negatively affect the Euro.        

The Pound’s resilience despite continuous Brexit uncertainty, coupled with a weakened Euro, has made OnePlus87 go short – and make a profit – on the EURGBP in September and October. Historically speaking, OnePlus87 also understands that any negative Brexit news will also affect the Euro – so even if something like Salzburg happens, its effect probably won’t last too long.

Fundamental analysis plays an important role – but one must not get too side-tracked by the biggest headlines like Brexit. It’s important to follow other news, look at history and practice patience.

Interested in learning more about FXTM Invest? Find out how to become a Strategy Manager or an Investor today.

For more information about FXTM, please visit www.forextime.com

FXTM Invest is not available under ForexTime UK Ltd.


Please note that the above article describes a specific example of how a trader made a profit in the financial markets using a combination of fundamental and technical analysis. It is important to remember that the markets are always unpredictable and you have an equal chance of making a loss if market movements do not go according to your plan. It's crucial to always keep this risk factor in mind.

Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Past performance does not guarantee future returns.

Share: Tweet this or Share on Facebook


Related

Mastering Bond Trading in 2024: A Comprehensive Guide
Mastering Bond Trading in 2024: A Comprehensive Guide

Bonds, often referred to as fixed income securities, continue to play a pivotal role in the financial landscape, serving as a fundamental instrument for governments and corporations to raise capital for various ventures...

Deciphering Crypto Lending: A Comprehensive Guide to the Process and Pros & Cons
Deciphering Crypto Lending: A Comprehensive Guide to the Process and Pros & Cons

While many cryptocurrency enthusiasts aim to profit from buying, holding, and selling digital assets, a growing number of individuals are discovering an alternative path to leverage their crypto holdings...

Maximizing Financial Gains with USDC: An In-Depth Guide to Earning Interest
Maximizing Financial Gains with USDC: An In-Depth Guide to Earning Interest

In an era where traditional banking yields are diminishing, the allure of earning interest through cryptocurrencies, particularly stablecoins like USD Coin (USDC), has gained immense popularity...

Maximizing Returns with USDT Staking: A Comprehensive Guide
Maximizing Returns with USDT Staking: A Comprehensive Guide

In the dynamic world of cryptocurrency, staking has emerged as a popular way to earn passive income. Among the various digital currencies available for staking...

The Modern Day Trader's Guide: Understanding Time Commitment and Strategies in 2024
The Modern Day Trader's Guide: Understanding Time Commitment and Strategies in 2024

As the curtain closes on 2023, with the S&P 500 signaling a moderate gain, the focus shifts to the landscape of day trading in 2024. Day trading, a practice where traders capitalize on intraday...

Unlocking Opportunities in Global Commodity Markets with FXTM’s Advanced CFD Trading
Unlocking Opportunities in Global Commodity Markets with FXTM’s Advanced CFD Trading

Step into the world of global commodities trading with FXTM, where we offer a gateway to diverse investment opportunities through advanced CFD trading. Experience the flexibility and potential of trading...


Editors' Picks

The Top Forex Expert Advisors 2024: Performance, Strategy, and Reliability Review

An annual roundup reviewing the most successful Forex Expert Advisors (EAs) based on their performance, strategies employed, reliability, and user feedback. This piece would provide insights into which EAs have been market leaders and why.

The Evolution of Forex Expert Advisors: Navigating the Path of Technological Revolution

The concept of automated trading has been around for decades, but the accessibility and sophistication of Forex EAs have seen significant advancements in the past few years. Initially, automated trading systems were rudimentary, focusing on simple indicators like moving averages.

The Impact of EAs on Forex Trading: A Double-Edged Sword

By enabling continuous, algorithm-based trading, EAs contribute to the efficiency of the Forex market. They can instantly react to market movements and news events, providing liquidity and stabilizing currency prices through their high-volume trading activities.

MultiBank Group information and reviews
MultiBank Group
84%
XM information and reviews
XM
82%
FP Markets information and reviews
FP Markets
81%
FXTM information and reviews
FXTM
80%
AMarkets information and reviews
AMarkets
79%
BlackBull information and reviews
BlackBull
78%

© 2006-2024 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.