The White House has arranged a meeting between Trump and UK Prime Minister Starmer this weekend. They will focus on finalizing a trade deal. This meeting aims to strengthen economic ties between the US and the UK. Specifics about the trade agreement have not been revealed yet.

Shared Trade Interests

Both leaders are expected to discuss terms that could help both economies. There is mutual interest in improving trade relations. This weekend’s meeting is a step toward enhancing economic collaboration. The results could lead to future economic partnerships. We anticipate increased volatility in currency markets leading up to the meeting. Short-term traders will focus on the GBP/USD currency pair. Any sign of progress or disagreement in their discussions could result in sharp price movements.

Potential Market Reactions

Historical data shows that political events have influenced the value of the pound. For example, the pound dropped 20% in the months after the 2016 Brexit vote. With two-way trade between the US and UK valued at over £310 billion annually, the stakes for this negotiation are high. As a result, we are preparing for significant price fluctuations by buying options. In addition to currencies, there are opportunities in equity index derivatives, especially those that track the FTSE 100. More than a quarter of the total revenue for FTSE 100 companies comes from North America, making them vulnerable to the outcome of this meeting. If a deal seems likely, call options on UK-focused exporters will be a key strategy. Given the former president’s history of using tariffs and an “America First” trade approach, the path to a deal is unclear. This uncertainty suggests that buying volatility might be wiser than betting on a specific outcome. We believe using straddles on the most affected currency pairs and indices is the right way to go. The Prime Minister’s focus on different labor and environmental standards could lead to friction in crucial sectors like agriculture and financial services. We will closely monitor companies in these areas for notable price changes. Traders can use options on specific sector ETFs to manage this risk without affecting the broader market. Create your live VT Markets account and start trading now.

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