The pound rally against the backdrop of growing optimism regarding Brexit is so confident that it can ignore some serious risks.
There are high chances that the appreciation will be further developed if British lawmakers sign an agreement, while the reason for a recession may be the refusal of parliament to approve the deal. Then Prime Minister Theresa May will have to return to the negotiating table with the EU, perhaps, to hold a second referendum or even a general election.
What will happen next? Any of these scenarios can trigger a decrease in the pound, which makes it attractive for holders of short positions. In general, the chances that the deal will be approved by the House of Commons are not so much. So, there are very good chances for a general election in the next six months.
This month, the pound added about 3 percent against the dollar and more than 1 percent against the euro. The majority of MPs should vote for the deal, and there are 650 people. This can be a problem because May does not have a majority vote. In addition, the opposition Labor Party said it would not vote for the deal.
So far, I recommend selling the pound on the rise and buying on the downturns, good, the current volatility can significantly increase the number of such transactions. Options investors expect the pound to remain volatile.
The material has been provided by InstaForex Company - www.instaforex.com