Perhaps no currency exchange traded fund has been more controversial this year than the CurrencyShares British Pound Sterling Trust (NYSEArca: FXB), which tracks the British pound’s movement against the U.S. dollar.
That controversy has only increased in the wake of Great Britain’s stunning decision to depart the European Union (EU), also known as Brexit. With sterling recently residing at its lowest levels in more than three decades, investors are wondering when the pound will rebound and if now, after FXB’s savage beating, is the time to consider nibbling at the ETF.
The pound has declined to a three-decade low for the past two days on increased evidence the Brexit vote is weighing on confidence in Britain’s economy, Bloomberg reports.
For instance, Henderson Global Investors suspended a 3.9 billion pound, or $5 billion, property fund, Wednesday after money managers, including Aviva Investors and Standard Life Investments, sent a stream of redemption requests in the wake of the Brexit uncertainty.[related_stories]
“It is tempting to view the new lows in the British Pound as an opportunity for a breakout trade downward, but we caution against that. If you are working on a relatively slow time frame, we think there should be better opportunities to take short positions later on, from higher levels. Traders working on faster time frames may even want to fish for counter-trend long entries here,” according to See It Market.