The pound has seen some declines after Boris Johnson backs the Leave campaign
I posted a few times over the week-end on the referendum, confirming my rally-sell view here.
"Yes I think we can expect some further GBP demand now we have something a little more concrete but I'm not ready to abandon my bearish/sell-rally tones anytime soon."
The demand comes from reducing one area of the uncertainty. At least we now know we will have a referendum this year but with it comes the additional immediate uncertainty from the hype/frenzy of the huge coverage we can expect over the next few months. A point I also highlighted in that post.
I raised the Boris factor too in those comments:
"There will be some heavy hitters campaigning to leave including close Cameron aide Michael Gove and, it is widely anticipated, the enigmatic Boris Johnson. Yes, homo sapien is conservative by nature as we saw in both the Scottish referendum and last year's UK general election but the issue of Europe is one that strikes a different chord and is non-political. Convincing arguments made to leave the EU will not fall on deaf ears. Cameron's decision/capitulation to allow his MPs a free vote and campaign on a personal view may yet come back to bite him up the backside."
I also had this on Boris' influence as we waited on his declaration yesterday:
"Cameron has also been urging Tory talisman Boris Johnson to back him. An Ipsos MORI poll showed Johnson, 51, is second only to Cameron when it comes to swaying public opinion on Europe. One in three voters said Johnson would be important in helping them decide which way to vote, the poll showed."
So after the confirmation that Johnson was in the Leave camp we had the move lower in the pound as Asian markets opened to take full advantage of Friday night's thin liquidity push higher.
So far we've had a cautious start as Europe wake up to the news and fallout but I expect GBPUSD rallies into 1.4285-1.4300 to be sold with more supply into 1.4350 and 1.4400-20.
EURGBP has sellers around 0.7800 then more into 0.7820-25 and that may help provide some demand on cable but we'll have support into 0.7750 too.
Rally-seller or dip-buyer the gloves are now off as we head into the June vote and we should expect some decent volatility on both rhetoric and opinion poll both sides of the price.
As I've said before it doesn't matter whether it's all hot air or not, at least for intra-day traders who will just need to trade flows. The longer-term trader will have a good idea already of where they want to be positioned but there's a few twists and turns to come yet.
Cable currently 1.4265 with EURGBP 0.7798
Boris Johnson with more than just Brexit in his sights
