Brokers and FX trading venues have been the winners of the Scottish Independence Referendum taking place tomorrow as speculation of voting results has led to increased volatility and volumes in the pound.
As Scotland prepares for tomorrow’s Independence Referendum vote, polls are currently too close to call. For traders, the lack of clarity of how things will play out tomorrow has led to both short and long-term speculation taking place on the direction of the British pound (GBP). Specifically, up for debate is how affected will GBP supply and demand be.
On one hand, Scotland could decide to continue using the pound as its currency. But, even in that scenario, taxation shifting and state owned revenues transferred to Scotland would be expected to disrupt the UK’s economy and lead to an overhaul of adjusting government budgets. An independent Scotland could ultimately decide to file for EU membership and adopting the euro, which would mean a long-term rotation away from the pound, adding supply to the market.
While the Forex market isn’t showing a thoroughly one-sided opinion on the voting, traders are favoring to short the pound going into tomorrow’s referendum. The short bias exists, even as the GBP/USD has already fallen over 5% from its year highs set in mid-July to a current 1.6331.
For brokers and exchanges, pound speculation has been a boon for volumes, extending increased Volatility and trading that took place in August and peaked in early September following further monetary easing from the ECB. The ongoing active markets contrasts from the first seven months of the year, when spikes in volatility tended to fizzle out within a day or two.
In connection to the referendum, the CME announced today that Open Interest in GBP options hit a record of 168,773 contracts on September 8th, but have since fallen to 143,310 contracts. At the time of the record, puts composed of 60% of open interest but has since retreated to 56%. The September 8th record coincided with 10 month lows in the GBP/USD at 1.6050 which may have indicated that some traders were expecting pound weakness due to the referendum,and may have closed positions after realizing profits well before voting took place.
Interestingly, the 56% put rate mimics that of traders at Saxo Bank, where figures from the broker indicate a 56%/44% Short/Long ratio for their traders. In a report today, Nick Beecroft, Senior Market Analyst at Saxo Bank, commented about the current weakness in the GBP/USD, a potential buying opportunity if voting was against Scottish independence, stating, “If the NO vote succeeds, GBP could start the long march back up towards the 1.6500 area and perhaps higher. Sterling’s current valuations would start to look rather under-valued underpinned by the recent indications from Bank of England Governor, Mark Carney that UK interest rates could rise as soon as the spring of 2015.”
Among other retail clients, the GBP/USD bearishness was more severe at eToro, where short positions are currently at 64%. Interestingly though, sentiment analysis at other social sites, but which aren’t directly calculated using customer positions, showed nearly no short bias. At StockTwits, sentiment among users has swung to 51% bullish today from only 27% earlier in the month. StockTwits uses a 7-day rolling average to calculate its sentiment, which may mean that current one day bullishness has risen well above the 50% mark with traders expecting a sharp spike higher tomorrow. Elsewhere, Investing.com sentiment is also only slightly bearish with a 52% mark.
Overall, the GBP/USD’s recent bounce from its 10 month low appears to have removed the sharp short conviction that existed in the markets early last week. As such, a ‘NO’ vote would be expected to trigger a reactionary pop higher in the GBP/USD, but without a sharp bearish bias, we may not see much of a short squeeze take place. On the other hand, a vote of ‘Independence’ could lead traders who are currently on the sidelines, but were riding the GBP/USD lower to reenter their trades on speculation of a retest of September’s lows. Either way, brokers and exchanges win regardless of the results of the voting.
As Scotland prepares for tomorrow’s Independence Referendum vote, polls are currently too close to call. For traders, the lack of clarity of how things will play out tomorrow has led to both short and long-term speculation taking place on the direction of the British pound (GBP). Specifically, up for debate is how affected will GBP supply and demand be.
On one hand, Scotland could decide to continue using the pound as its currency. But, even in that scenario, taxation shifting and state owned revenues transferred to Scotland would be expected to disrupt the UK’s economy and lead to an overhaul of adjusting government budgets. An independent Scotland could ultimately decide to file for EU membership and adopting the euro, which would mean a long-term rotation away from the pound, adding supply to the market.
While the Forex market isn’t showing a thoroughly one-sided opinion on the voting, traders are favoring to short the pound going into tomorrow’s referendum. The short bias exists, even as the GBP/USD has already fallen over 5% from its year highs set in mid-July to a current 1.6331.
For brokers and exchanges, pound speculation has been a boon for volumes, extending increased Volatility and trading that took place in August and peaked in early September following further monetary easing from the ECB. The ongoing active markets contrasts from the first seven months of the year, when spikes in volatility tended to fizzle out within a day or two.
In connection to the referendum, the CME announced today that Open Interest in GBP options hit a record of 168,773 contracts on September 8th, but have since fallen to 143,310 contracts. At the time of the record, puts composed of 60% of open interest but has since retreated to 56%. The September 8th record coincided with 10 month lows in the GBP/USD at 1.6050 which may have indicated that some traders were expecting pound weakness due to the referendum,and may have closed positions after realizing profits well before voting took place.
Interestingly, the 56% put rate mimics that of traders at Saxo Bank, where figures from the broker indicate a 56%/44% Short/Long ratio for their traders. In a report today, Nick Beecroft, Senior Market Analyst at Saxo Bank, commented about the current weakness in the GBP/USD, a potential buying opportunity if voting was against Scottish independence, stating, “If the NO vote succeeds, GBP could start the long march back up towards the 1.6500 area and perhaps higher. Sterling’s current valuations would start to look rather under-valued underpinned by the recent indications from Bank of England Governor, Mark Carney that UK interest rates could rise as soon as the spring of 2015.”
Among other retail clients, the GBP/USD bearishness was more severe at eToro, where short positions are currently at 64%. Interestingly though, sentiment analysis at other social sites, but which aren’t directly calculated using customer positions, showed nearly no short bias. At StockTwits, sentiment among users has swung to 51% bullish today from only 27% earlier in the month. StockTwits uses a 7-day rolling average to calculate its sentiment, which may mean that current one day bullishness has risen well above the 50% mark with traders expecting a sharp spike higher tomorrow. Elsewhere, Investing.com sentiment is also only slightly bearish with a 52% mark.
Overall, the GBP/USD’s recent bounce from its 10 month low appears to have removed the sharp short conviction that existed in the markets early last week. As such, a ‘NO’ vote would be expected to trigger a reactionary pop higher in the GBP/USD, but without a sharp bearish bias, we may not see much of a short squeeze take place. On the other hand, a vote of ‘Independence’ could lead traders who are currently on the sidelines, but were riding the GBP/USD lower to reenter their trades on speculation of a retest of September’s lows. Either way, brokers and exchanges win regardless of the results of the voting.
Cheetah Fund Investors Lose $9 Million in Alleged Fraudulent Scheme
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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