Remember UK Prime Minister Theresa May’s words, “Brexit means Brexit”? If you cut through all the noise, this remains true.

It’s not a matter of ‘if’, it’s ‘when’ the UK will leave the European Union. This is something that has stuck with my fundamental view when trading the markets over the tedious duration of the Brexit debacle.

No matter how the information was delivered on Brexit or how many people were on the other side of the vote, the vote to leave the EU is the one that counted.

Too much politics

For most part, the problem with all this has been the political class, in my view. On both sides, there are too many individuals out for themselves.

Prime Minister Theresa May has done all she can.

The European Union itself has been just as problematic, with the European Court of Justice saying the UK could cancel Brexit altogether without the agreement of other nations, and constantly rejecting the assurances the UK needed on the Irish border backstop. All this has led to this stalemate.

Keep emotion out of it

As a trader, it’s important not to get emotionally attached to opinions.

When you’re trading the markets, you have to be prepared for the unexpected, while taking into account how the current sentiment is generated. Of course, mainly this is by people… people using their own opinions to make a trade call.

The markets, however, are so full of information that even when everything is ‘known’, the most logical answer may be the wrong answer in the short term.

It’s clear to me that although there are delays, Brexit will happen.

The pound will go up

The closer we get to Brexit, the more likely the British pound is to go up, so the best way for the markets to make money is to go against the most obvious outcome and push the pound lower before the event actually happens.

It’s hard to explain the difference between trading and investing. Brexit is such a huge event – one that will define a generation – that it’s hard to convey the magnitude of movement on the markets. Trillions will be wagered on the direction of the UK’s currency.

There will be many longer-term investors that will both make and lose money on the pound’s reaction to Brexit over time, but the safer money has been made in the short-term, trading the intra-day movements.

The Brexit uncertainty, but also its inevitability, has been the perfect storm in which to buy GBP low points over the last two years.

Published 29 May 2019

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