Trading the Markets from Afar
Whether you are an expatriate or simply looking to take an extended work/play vacation abroad, the prospect of earning money while traveling overseas is an enticing one. Unfortunately for many folks, this isn’t always possible – what with immigration (work visas), logistical requirements, and whatnot. For the internet-savvy among us, there is a myriad of opportunities available for generating a handsome income while sipping on margaritas at the beach. As unlikely as this prospect sounds, it is real and taking place on a global scale. Of course, we are referring to commodities, indices, currencies, and share trading on the go. Many more expats and tourists are using their knowledge of the financial markets to profit off geopolitical uncertainty, central bank actions, and fiscal policy.
Recent Geopolitical Events are Driving Financial Markets
It comes as no surprise that the global workforce is characterized by the increasing mobility of workers, deregulation, multilateralism, and the internet. Mobile trading is particularly ubiquitous, and this is evident with a large uptick in online trading taking place. Typically, traders and investors can dabble in the financial markets on Wall Street, Europe, and in Asia at the click of a button. An extensive understanding of financial markets is not required to profit off price movements. Several major geopolitical events have rocked the financial markets, including the missile strike on Syria, bellicose action by North Korea, the ratcheting up of tensions between the U.S. and Russia, and a new track in the U.S./China relationship.
More recently, UK trading activity has been ramped up to reflect the volatility with Brexit-related issues. Prime Minister Theresa May has called for a general election in the United Kingdom on June 8, 2017. The reasoning behind this is to strengthen the resolve of the UK government to take the country through the Brexit process with the European Union. Currently, the House of Lords and the Labour Party are weakening her position on Brexit proceedings. Prime Minister May believes that a resounding election victory will give her a stronger hand to push through the Brexit process. This has the potential to significantly increase the value of the GBP, particularly if the UK populace votes in favor of Prime Minister May. If the Tories gain more votes, they will have more seats, and this will allow them to push through their mandate for a Brexit much more easily.
Trading the GBP from Outside the UK
As far as trading opportunities go, it’s necessary to have a basic understanding of CFD Trading to make this type of data work for you. Renewed confidence in the UK government will bolster the number of members in the House of Commons. The government requires a two-thirds majority to support a general election, and most of the opposition parties are in favor of an election. Besides, this will also be the first time that Prime Minister May gets an official mandate from the British people to rule as Prime Minister of the country. Recall that she was simply sworn in after David Cameron stepped down. The GBP has rallied in the aftermath and was trading up 1.48% after PM May’s announcement. It is currently trading at 1.2751, up $0.185. The uptick in the GBP is a direct result of the prime minister’s decision for a snap election. Further upside movements in the GBP over the short-term are possible, and this also bodes well for UK travelers abroad enjoying greater purchasing power with their GBP stretching further.
Investor Sentiment Remains Short-Term Bullish
The strength of the GBP is primarily based on speculative sentiment. We have seen a rather bullish wave dominating the GBP’s performance in 2017. It appears as if the release of economic data, constant reassurances by the Bank of England and Monetary Policy Committee members, and uncertainty in the euro-zone are driving up GBP demand. As for Brexit-related news, only time will tell how the June 8 election will go. Sentiment is generally positive vis-à-vis the Tories, and this is good news for the GBP. However, the short-lived nature of the GBP’s appreciation is a warning sign. If the ruling party wins the general election in a convincing way, added momentum will be given to the sterling. This will increase the net short-term positions on the pound, but over the long-term, put options are dominant. It’s interesting to point out that the results of the first leg of the French election had a dampening effect on the GBP. This is to be expected, given the decreased geopolitical uncertainty that results from a moderate candidate as opposed to a firebrand populist leader. Investors have been shorting the GBP for the week ending Friday, the 28th of April 2017, and going long on the EUR as it looks increasingly unlikely that Marine Le Pen will control the Republic of France. The 2% appreciation against the EUR of late has all but evaporated in a matter of days, but in currency trading circles anything can happen at any time.