Global investment bank Citigroup has told traders “good luck” ahead of the House of Commons meaningful vote on Brexit on Tuesday evening.
While volatility is usually associated with cryptocurrencies, Tuesday’s vote is expected to cause violent swings in fiat currency price action, prompting concern from brokerage firms.
According to Bloomberg, London-based TransferWise is placing a £10,000 cap on transfers to and from the UK for a 24-hour period starting at 9am on January 15th. The company’s limit is usually £1 million.
FWIW, absolute ATM vol levels in $GBPUSD today (left image) are way below the levels we saw before the #Brexit vote in June 2016 (right image). pic.twitter.com/CdMXJt4qhy
— IV (@iv_technicals) January 15, 2019
“Beastly pair”
Citigroup described GBP/USD as a “beastly pair” in a stern warning to traders. “Good luck for Tuesday’s House of Commons vote for anyone trading the beastly pair,” they wrote.
Sterling has rallied against the dollar since making a low on January 2nd, rising 4.4% before being halted by the 100 exponential moving average (EMA) on the daily chart.
Price is now hovering around $1.285 dollars to the pound. A short position currently looks attractive, with many political commentators expecting the deal to get voted down in the House of Commons, which would cause yet more political instability in the UK with the potential of a general election or a second referendum.
If Theresa May is successful in getting her deal across the line in parliament, sterling could be set to rally. If $1.29263 can be taken out, the next levels of resistance to look out for are $1.30163 and $1.32392.
Will the Brexit vote impact the cryptocurrency market?
Simply put, there is no meaningful correlation between the price of Bitcoin and the price of the pound. However, a no-deal Brexit would be catastrophic for businesses in the UK, with the potential to cause another recession.
Economic instability within the UK could help drive the adoption of cryptocurrencies, which in spite of their volatility have yielded greater returns than the stock, bond, pension, and housing markets over the past decade.
Bitcoin could eventually be viewed as a safe haven from flailing fiat currencies. If the pound drops below the 2017 low of $1.19089, panic will push investors and firms into diversifying assets, with cryptocurrency becoming a viable option.
For more news, guides, and price analysis, click here.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.