Soft Brexit and GBPUSD

1. Theresa May, prime minister of the kingdom, filled her cabinet with Soft-Brexiter.

As we all know, Mrs. May, PM of the UK, replaced foreign minister who had held up hard-Brexit with Soft brexiter.

And some experts think this change could be a factor which would reverse direction of value of sterling.

Their model suggest that fair number of GBPUSD is 1.60.

They are arguing that sterling has bigger fundamental issue than other G10 currencies have, and probability of solving problem is raised with entering of Soft-Brexiters.

2. Politically, I don't think that being Soft, as much as Britain want, isn't possible

But I think we should listen to opinions of the other experts who are suggesting that there are no assurance in conclusion of Soft-Brexit.

Even though negotation of Breixt is proceeding too slow in now, and will be realized in 300 days, EUROSTOXX50 don't show unusual volatilites wihch could be relavant with uncertainty for Brexit.

Real economic slump in Eurozone which is against early expecation, donsn't look like being affected by uncertainty for Brexit considering other countries' slumps.

It will be sure that real Brexit will bring economic impact to the zone more or less, and this is reason why governments in Germany and France are welcoming the change of stance.

But before the realization, nobody know how bigger the impact is, and feel the emergency measure to prevent that.

Politicians in Germany and France don't get political burden at all even if negotiation doesn't end after 6 months of being realized.

And inside the UK, British citizens don't want Soft-Brexit as many surveys announced.

They are showing huge grievance continuously, using words like colony.

3. Even though Soft-Brexit is proceeding as they think, strong USD will be continued.

Since Last year, corrleation of rates of change between EURUSD and GBPUSD has been larger than 0.5, and the direction of those two has been same.

In now, the biggest factor in GBPUSD is direction of USD.

And USD, which is supported strongly by fundamental strength of US economy and risk-aversion from huge volatilites, will be going up continuously.

Even though higher inflation and wage increase, the UKs' real economy is still going through slump stage based on risk-aversion of corporates' investment with Brexit.

In now point, I think too old Brexit couldn't win over those factors.  

Brexit is too old to give impact to the the markets.

4. Strong USD will win over Soft-Brexit

The summary is that Soft-Brexit isn't too difficult to happen.

But even if it would be realized, Strong USD will push GBP to lower point continuously.

My target for GBPUSD is 1.25, and this suggests "Sell" in GBP.