Dave's deal euphoria disappears before the weekend is up.
Poor old Cameron. He's like a bloke who's just won the lottery then watched his ticket blow out his hand and into the Thames.
If I'm honest I wasn't expecting things to go potty quite so quickly. I knew the weekend press was going to go to town but I thought that all the campaigners might give it a couple of days to set their stalls out. We know that's not the case now and the speed at which the politicians have started choosing sides is a big part of why the pound is super volatile right now.
The Boris news is obviously big due to his position in London. The referendum is going to be a big deal for the City. Like it or not it's the source of most of our income and that's not to be taken lightly as he has the ear of a lot of big City firms.
Aside from the politicians raising their flags, many of the country's biggest firms will also be having a say on what an exit might mean. That's also going to have a strong effect on the pound.
All this news has come very quickly and the average Brit will take a bit longer to chew it all over and form their opinions. As I mentioned Friday, this is just the very beginning of the Brexit trade and we now have heightened news headline risk for the pound.
The next publicised big risk is Cameron speaking to parliament at 15.30 GMT today. He's going to run over the details of the EU deal and is likely to touch on the dissenters in government. It might be a bit early for any drastic action but in the days and weeks ahead, if he faces a huge revolt from his own party, he may very well put his neck on the line and offer to resign if the leaving vote wins. That would be a very big step that could throw the government into disarray. I'm not saying it will happen but this is the sort of stunt our politicians can pull out of the hat and we have to be aware of it.
Trading politics is usually ugly at the best of times so for those not from these shores or less experienced, it might be wise to think about taking a pound trading holiday until things settle down a bit. If you are going to trade it then stick to the well defined levels and make sure you have your trades on a tight lead.
Looking at the prices, I'm not surprised by the moves. We saw Asia react first and then London took up the baton and the chart shows those moves distinctly.
GBPUSD 15m chart
1.4250/60 looks to be where the Asia traders found support and that's might well be where we find the strongest resistance. There looks to be minor resistance at 1.4220 and I suspect we'll see some also at 1.4200. Don't discount anything though. Given the times all these moves happened and the levels of liquidity, we can just as easily go back to 1.44 as we can go to 1.40.
Looking longer, today's low matches the Jan 29th low, give or take some change. Around 1.4120 we're likely to see support ahead of 1.41 and a break there will target the Jan lows at 1.4078
GBPUSD H4 chart
That 1.4086 level is a fairly strong one as it goes back to an old level of support back in 2009. It could be an important step before we get an attack on 1.40.
This week is likely to be very choppy, then we might settle down a bit so we'll have to stay on our toes.
Welcome to the whacky world of Brexit trading. I wish you luck.
