A global bonds selloff has pushed yields up across the board towards post-Brexit highs while the anti-establishment wave sweeping the western world could force a 'No' vote on the Italian referendum in December.
Article / 01 June 2016 at 5:49 GMT

Are you hiding after your strong long GBPJPY call?

Global Macro Strategist [Asia based] / Saxo Bank
  • There are just three weeks to go until the Brexit referendum
  • The result of the Guardian poll was a surprise, after weeks of sterling strength
  • The timing behind the GBPJPY call idea was poor

By Kay Van-Petersen

"Are you hiding after your strong long GBPJPY call?" (see #SaxoStrats: GBPJPY could be set for climb higher). I am paraphrasing one of the emails I got from clients….(you should hear banter on the phones … “Yes, I am under my desk whispering & whimpering…” “Funny how you don’t email/call me when I get things right…What do you mean when is the last time I got something right…” etc…  )

Within 24 hours of the long GBPJPY trade idea, we got stopped out (-1.8%) as we sailed through 160.00 stop level, after being long from 163.00.


The Guardian poll showing that the UK is leaning towards Brexit was based on a sample of just 3,000 people. Photo: iStock

The timing behind the idea was poor, based on the fact that it walked right into that Guardian poll overnight, after what has been quite a few weeks of sterling strength

As one global macro pm very rightly pointed out, a -1.8% stop level on tow to four month strategic trade is too tight and they are dead right – especially in this market!

Here is a link to the guardian poll piece: UK voters leaning towards Brexit, Guardian poll reveals. And this is what happened to sterling crosses overnight, and we have included  YTD Charts for context .

GBPJPY charts


GBPUSD charts


EURGBP charts



GBPNZD charts



Note the sub-headline in the Guardian article, which says that a “Phone and online survey shows a 52-48 split in favour of leaving the EU as referendum campaign gathers steam”, is an outright stretch of the truth – which I get, its media and journalism right. Polls that say the UK is staying are not going to generate as much buzz as the UK is leaving.

  • If you dig deeper into the piece & the ‘sample’ size is about 1000 for the phone callsand about 2000 for the on-line
  • So that’s 3000 people, whilst the UK population is 64 million people. Now I am not saying they have to do a poll on 1 ml people… but lets be honest 3,000 is far from a sample size.
  • Quotes below on the actual surveys, emphasis my own/
  • “In the phone poll of more than 1,000 adults, 45% said they favoured leaving the EU, and 42% remaining, with 13% saying they did not know.”
  • “Using online polling, 47% said they would like to leave and 44% remain, with 9% saying they were undecided.”

I do not know about you, but in my book, generally undecided end up with the status quo… which is staying. So in actuality the polls were:

  • 45% leave, 42% remain, 13% do not know for the phone calls
  • 47% leave, 44% remain, 9% undecided for the on line
Take a look at this great Brexit polling tool from The Economist. Based on the constituents of the poll, you can clearly see how the results vary and how they develop visually over time. Point here is, one can construct a poll to justify their agenda.

Scotland vote revisited

 So let's go back to the Scottish referendum in 2014. Where some of the bookies were paying out in advance on the bets to those that said Scotland would remain as part of the UK (the no camp), before the actual vote on September 18, 2014

  • If you recall, going into the final days, if you read any headlines, the impression was… this is like 50.1% to 49.9%... It seemed that close… yet when we got the results it was:
  • Scotland referendum results were: No 55%, Yes 45%...
  • That’s a 10% gap… that’s not close… but you would not have felt comfortable on that outcome if you were just listening to the media (i.e. Polls): Scottish independence odds: bookmakers shorten odds on No
  • So I don’t mean to pick on the Guardian here, but I thought it interesting to see what articles they may have run on the count down to the September 18, 2014 Scottish Referendum and you’ll never believe it…

Going back to the Brexit June 23 date. Currently betting shops are showing odds that give a probability of 75% in the stay camp 25% in the exit camp (moving slightly in the favour of exit camp from last week, but still a very clear majority, with just weeks to run to the referendum)

 “Scottish referendum: Shock new poll says Scots set to vote for independence”: Sunday, September 7, 2014, The Guardian

Don’t mistake bad luck for turning a good trade to a bad trade, if at first you don’t succeed, your try again, that’s why you risk max 1% of your capital on any one trade idea. Statistically speaking you need at least 20 trades, to start getting a clear measure of winners vs. losers… 

  • I will most likely reinstate the trade again soon, I still think the thesis is sound & bad luck is a natural part of the game in this business
  • Obviously other sterling crosses also looking interesting, but I still think GBPJPY & EURGBP are the purest ways of playing this. Yes Cable is interesting, but you have a lot happening on the USD/Fed side of things…  
  • These polls are creating great trading opportunities, but clearly volatility needs to be taken into account so as not be shaken out of any underlying positions
  • Options?! Yes, please. And whilst volatility jumped overnight in sterling crosses, its still quite a bit lower than where we have been over the past few weeks (but historically VERY high), making playing this being long options worth considering i.e. no stop outs, premium is the most you can lose, etc…
Lastly I was at a client event last night and got the question what would happen in the unlikely event that the UK did leave. Its= would be a massive risk-off event… from a Global Macro perspective, its does not get any bigger than a situation like that.

So you see flight to safety with USD, US bonds, yen, gold, silver, Bitcoin and the likes benefiting, whilst equities would probably be down anything from 5-10% in a week… The euro & eurozone would be hit the hardest from such a scenario, with precedent risk now becoming a real issue (peripherals).
– Edited by Robert Ryan

Kay Van-Petersen (KVP) is Asia Macro Strategist at Saxo Bank, the home of social trading. In addition to, please follow him on twitter @KVP_Macro
01 June
fxtime fxtime
Statistical sampling for Brexit et al is a tawdry affair. Bernoulli who established the Laws for rigourous testing followed by the Golden laws have been ignored due to the sheer scale of voters to test so we utilise the ''weak'' law of large numbers and have a 3% error rate either way on a n'th sample size as a measure of current sentiment only as at that time of sample however the 3% error rate only applies to the rigours of the mathematics and confidence levels and NOT the true sample to reflect the UK demographics.....policticians are useless at understanding mathematics or statistics just look at Gove the former Education minister who didn't know basic core children maths tables such as 9 x 9 !! Incredible that everyone reacts to these ''polls'' :-(
01 June
fxtime fxtime
Totally agree about the trade one can achieve 100% success as there are a plethora of chance events that can obliterate the trade but that doesn't mean the trade was wrong it simply means at that time events went against's what we do now that matters.
01 June
Kay Van-Petersen Kay Van-Petersen
Thx for the comments & observations fxtime. Again could not agree more. Amazing that even given the poll vs. bookies vs outcome that we experienced during the Scottish Referendum, the mkt completey forgets & we are now getting a rhyme on history.
01 June
fred seru fred seru
I laughed alittle on your headline question...I made that very call to go long yest and took a hit.
I haven't even bothered to re-analyse the pair hence hiding


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