U.S. Markets open in 3 hrs 39 mins
  • S&P Futures

    -33.00 (-0.89%)
  • Dow Futures

    -248.00 (-0.84%)
  • Nasdaq Futures

    -83.50 (-0.73%)
  • Russell 2000 Futures

    -18.50 (-1.10%)
  • Crude Oil

    -0.82 (-1.04%)
  • Gold

    -4.30 (-0.26%)
  • Silver

    -0.27 (-1.45%)

    -0.0020 (-0.2030%)
  • 10-Yr Bond

    0.0000 (0.00%)
  • Vix

    +5.16 (+18.87%)

    -0.0152 (-1.4044%)

    +0.7110 (+0.4961%)

    +71.78 (+0.38%)
  • CMC Crypto 200

    -6.93 (-1.56%)
  • FTSE 100

    -37.68 (-0.54%)
  • Nikkei 225

    -722.28 (-2.66%)

Trade of the Day: Guggenheim CurrencyShares British Pound (FXB)

To receive further updates on this Guggenheim CurrencyShares British Pound (NYSEARCA:FXB) trade as well as an alert when it’s time to take profits, sign up for a risk-free trial of SlingShot Trader today.

The British pound (GBP) has not performed well in 2018, so neither has the Guggenheim CurrencyShares British Pound (NYSEARCA:FXB) — when the GBP gets stronger, FXB moves higher, and when the GBP gets weaker, FXB moves lower. And the value of the currency compared to the U.S. dollar (USD) has been falling as the U.S. economy has been strengthen during the year, and investors have become increasingly concerned that the British economy is going to suffer if the British government can’t negotiate favorable “Brexit” terms with the European Union (EU).

We’re running up on the October deadline when leaders from the EU will gather at a summit to agree, or not agree, on a Brexit deal, and it appears British officials have been over-estimating how accommodating EU leaders are willing to be as Britain abandons the trade union. British officials were hoping they could still count on favorable trade arrangements after severing their agreement, but that is not a foregone conclusion — especially in this global environment that has been tainted by trade-war rhetoric.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

If Britain can’t obtain favorable trade arrangements with the EU, the British economy is going to suffer, the Bank of England (BOE) may need to try and stimulate the economy and the value of the GBP is going to fall. When you compare this to the current strength of the U.S. economy and the USD, we think FXB is going to drop down to long-term support at $123, if not lower, during the next few months.

Trade of the Day: Guggenheim CurrencyShares British Pound (NYSEARCA:FXB)
Trade of the Day: Guggenheim CurrencyShares British Pound (NYSEARCA:FXB)

Here is how we recommend trading the situation:

Use a limit order to ‘buy to open’ the FXB October 19th $123 Put (FXB181019P00123000) for a maximum price of $1.00.

We are buying an October expiration to make sure we give this move plenty of time to happen in the run up to the October meeting in Brussels. You may see open interest that’s fairly thin for the October expiration. This is because the options have only been available for trading for a couple of weeks. We’re not too concerned with low open interest. The bid/ask spread is still tight, and if you use limit orders, you should have no trouble getting filled at a competitive price.

Follow our Facebook page to receive each Trade of the Day direct to your News Feed — and join the conversation.

You can learn more about identifying price patterns and using them to project how far you think a stock is going to move in our Advanced Technical Analysis Program.

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news. Get in on the next SlingShot Trader trade and get 1 free month today by clicking here.

Compare Brokers

The post Trade of the Day: Guggenheim CurrencyShares British Pound (FXB) appeared first on InvestorPlace.