Monday 22 June: UK Prime Minister Resigns

The GBP strenghtened on upon the announcement the prime minister has resigned. Which is perhaps unusual, currencies 'usually' weaken amidst political uncertainty. The theory being, if Andy Burnham takes office, he'll likely replace Rachel Reeves. The market has always been wary of Rachel Reeves policies and the thinking is a replacement would bring more fiscal stability. How that all plays out, only time will tell. But in the meantime, I'm more inclined to think GBP USD will 'roll over', rather than continue up. Which is in keeping with my current thoughts in general, 'buy USD weakness'. The same could be said about USD CAD, which pulled back following CAD CPI data. But the data is unlikely to provide lasting support to the CAD.

Ad things stand, I have my eye on a USD long trade. It's just a question of waiting for the moment I feel most confident in a stop loss, against whichever currency has the least going for it at the time.

The potential spanner in the wheel could be the JPY and 'intervention anxiety'. Especially as we've just seen a sharp USD JPY drop from 40 year highs.

Please feel free to email any thoughts or questions: johnelfedforexblog@gmail.com