Article 50 to be triggered today. When to trade (Daniel Johnson)

AUD GBP Sinks After Reserve Bank Disappoints

Today we will see the triggering of Article 50 and Britain will officially exit the EU.  Despite many analysts predicting a sharp fall in Sterling value against the Australian Dollar I am of the opinion once the dust settles Sterling will be in a better position than current levels (GBP/AUD currently sits in the low 1.62s).

The market moves on rumour as well as fact and I am of the opinion a hard brexit is already filtered into current GBP/AUD buoyancy levels. The market reacts badly to uncertainty or an unforeseen event. It is common knowledge article 50 will be triggered today. I think once the button has been pushed Theresa May will give a very positive speech on how Britain will move from strength to strength and the pound will rally. I would not expect significant gains however.

Despite , my viewpoint, I would still not gamble my entire trade on this hunch. During the Brexit vote last year many investors were so confident in an outcome where Britain remained in the EU they were willing to wait until after the event before performing their trade in its entirety. The consequence of which was costly, causing trades to become tens of thousands more expensive.

If buying the Australian Dollar I would consider doing 20-40% of my trade before the invocation of article 50 and gamble with the remainder.

Australia has now had a record breaking run of economic growth, beating the previous record held by the Dutch. Despite, this I think Sterling is chronically undervalued due to Brexit and I would expect GBP/AUD to be above 1.70 by the end of the year.

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