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The Pound Melts As Brexit Goes To The Wire


  • Europe agrees with the Prime Minister’s plan.
  • Issues on the home front: contempt of Parliament?
  • The pound decays as time is its enemy; the EU helps stoke domestic issues for Prime Minister May.
  • A deal by the March deadline.
  • A recovery in the pound; buy the FXB scale-down on weakness but stop out if there is a no vote on December 11.
  • Looking for more? I update all of my investing ideas and strategies to members of Hecht Commodity Report. Get started today »

The events surrounding the final form of Brexit have been picking up steam over recent weeks, and on Tuesday, December 4 they reached a new peak.

In June 2016 when the United Kingdom voted to divorce from the European Union, the world was shocked by the vote. The narrow margin of victory led to a new Prime Minister for the UK as David Cameron stepped aside and Theresa May took his place. The value of the British pound against the dollar plunged in the aftermath of the Brexit referendum moving from a high at $1.5009 in June 2016 to a low of $1.2001 in early 2017. In hindsight, the U.K. never wholly bought into the EU as they held onto their currency, the pound, and refused to retire their monetary instrument in favor of the euro.

Over the past two and one-half years, Prime Minister May has worked on a deal that would result in the divorce the voters had approved. The task for the leader of the U.K. was formidable. Any deal had to meet with the approval of the European Union, the voters of the U.K., members of Parliament, and her Tory party. Pleasing just one of those constituencies would be a steep mountain to climb, coming up with a deal that all could live with has been nearly impossible.

The pound rose to a high at $1.4413 against the dollar in mid-April as the Prime Minister put the pieces together for a deal. However, the British currency has been falling like a stone since then and on Tuesday, December 4 it hit a new low for this year at $1.2665. The Invesco Currency Shares British Pound ETF product (NYSEARCA:FXB) does an excellent job replicating the price action in the U.S. dollar versus the British pound currency relationship. On

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This article was written by

Andrew Hecht profile picture
Weekly commodities commentary and calls, from a Wall Street veteran
Andy Hecht is a sought-after commodity and futures trader, an options expert and analyst. He is the #2 ranked author on Seeking Alpha in both the commodities and precious metals categories. He is also the author of the weekly Hecht Commodity Report on Marketplace - the most comprehensive, deep-dive commodities report available on Seeking Alpha.

Andy spent nearly 35 years on Wall Street, including two decades on the trading desk of Phillip Brothers, which became Salomon Brothers and ultimately part of Citigroup.

Over the past two decades, he has researched, structured and executed some of the largest trades ever made, involving massive quantities of precious metals and bulk commodities.

Andy understands the market in a way many traders can’t imagine. He’s booked vessels, armored cars, and trains to transport and store a broad range of commodities. And he’s worked directly with The United Nations and the legendary trading group Phibro.

Today, Andy remains in close contact with sources around the world and his network of traders.

“I have a vast Rolodex of information in my head… so many bull and bear markets. When something happens, I don’t have to think. I just react. History does tend to repeat itself over and over.”

His friends and mentors include highly regarded energy and precious metals traders, supply line specialists and international shipping companies that give him vast insight into the market.

Andy’s writing and analysis are on many market-based websites including CQG. Andy lectures at colleges and Universities. He also contributes to Traders Magazine. He consults for companies involved in producing and consuming commodities. Andy’s first book How to Make Money with Commodities, published by McGraw-Hill was released in 2013 and has received excellent reviews. Andy held a Series 3 and Series 30 license from the National Futures Association and a collaborator and strategist with hedge funds. Andy is the commodity expert for the website about.com and blogs on his own site dynamiccommodities.com. He is a frequent contributor on Stock News- https://stocknews.com/authors/?author=andrew-hecht

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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