GBP/USD bulls underestimate the risks of no-deal Brexit
The pound has racked up a record 10th straight week of decline against the euro amid the likely victory of Boris Johnson in the Conservative leadership race and a series of weak economic data in the UK. It was just Jerome Powell’s dovish stance that allowed the GBP/USD bulls to go ahead. Nonetheless, markets obviously underestimate the risks of messy Brexit.
The implied 6-months volatility for the EUR/GBP pair is close to 7. It was twice as high before the Brexit referendum and hit the value of 10 before then end of transition…
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