The market is gearing up for extreme, even force majeure, pounds in the run-up to the election.
At this point, the currency remains calm without much change, but “under the hood” noise is intensifying, indicating that the risks are significant. Participants are also prepared to assimilate election data and results. Volatility rises to 2016 referendum levels.
The cable stands just over 1.32, and investors are waiting for the primary results.
If we have results that lead to a broken parliament, get your parachutes ready.
Graphs: Used with permission of Bloomberg Finance L.P.
Trader Martin Nikolov