Macro Digest:
· The momentum is presently with leave campaign (see chart and article below..)
· GBPUSD volatility is trading at substantial premium to norm, Scottish referendum, and actuals…. = RISK WARNING…
· There is now negative risk transfer from Brexit into equity (see below)
· IF leave wins expect Bank of England to cut rates by 25 bps.
· GBPUSD is going to 1.2000 with or without Brexit
· GBP yield makes all time low……
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Brexit vote is now spilling over to risk overall….. the trends is clear in the polls:
https://commons.wikimedia.org/wiki/File:UK_EU_referendum_polling.svg
There is ZERO liquidity in the GBPUSD option market…
GBPUSD 1 month risk reversal is @ -800 bps!!!
This is major warning signal for risk…….norm as can be seen is plus minus 1
All tenor (expiry) into June 23 Brexit vote is well bid..
2week 36/41…
1 month minus 12 mos = fair value = is trading >2x norm….
Cash – Spot..
GBPUSD support comes in @ 1.4068 – (which if broken is major sell level)
Furthermore…. BREXIT is now spilling into equity… here is 1 mth Risk reversal in GBPUSD vs. DAX Future in June
GBP long term yields makes ALL TIME low…
Leading economics journalist Ambrose Evans-Prichard decides to vote leave
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