Introduction
The official date that Britain leaves the European Union (29 March 2019) is getting ever closer, but there is still just as much uncertainty as ever.
Nobody really knows if we will be leaving the EU on this date without a deal, or if this date will be extended in order for all parties to reach some kind of agreement.
Indeed there is still an outside chance that a second referendum will take place at some point in 2019.
This all means that it is practically impossible to predict where the pound pairs, such as the GBP/USD pair, for example, will be trading in the coming months.
GBP/USD Price Chart
If you take a look at the daily price chart of the GBP/USD pair below, you can see that this is reflected in the price action because the price has been drifting upwards and downwards between about 1.25 and 1.32 for several months now:
Sometimes it will move a little higher on any news that a deal is looking more likely, and other times it will drift lower when the odds of leaving without a deal have increased.
Regardless, the daily price moves are now relatively mooted because you can see that the average true range has dropped to around 85 points, which also makes it fairly difficult to trade with any real conviction.
Finally, you will also notice that the moving averages that I have plotted on the chart, ie the 20, 50, 100 and 200-day exponential moving averages are all tightly packed together, as they are on the weekly chart, which once again highlights a real period of uncertainty.
Closing Comments
So the point is that you should be very wary of trading the GBP/USD pair right now because of the ongoing uncertainty surrounding Brexit.
I’m sure the price will eventually break strongly upwards or downwards once we have a firm agreement in place between Britain and the EU, but for now nobody really knows what is going to happen in the coming weeks and months, including Theresa May and her fellow MPs.
The GBP/USD could easily rise to at least 1.40 if we can somehow salvage a clean Brexit, but it could just as easily crash to 1.20 or lower if we crash out of Europe without a deal.
However it is too hard to predict right now, and so you would be very foolish to take any long-term positions on this pair, and with the daily price swings being relatively small, it is not exactly a great pair to day trade either.
So in the meantime you are probably better off trading some of the other major currency pairs until a clearer picture emerges.
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