Brexit: FX price swings may still be large in the coming sessions - BBH

Research Team at BBH, suggests that the dramatic reaction to the UK decision to leave the European Union has changed the technical condition in the foreign exchange market. 

Key Quotes

“While the precipitating factor is a fundamental political development, it is mediated by psychology.  Group psychology is the subject of technical analysis.  In the current context, the technical analysis puts the price action in the larger context and provides mile-markers, as it were, and potential inflection points. 

Typically volatility in the short-term is auto-correlated.  High volatility in one period is often followed by high volatility in the next.  Not to put too fine of a point on it, it is difficult to put toothpaste back into the tube.  That warns that price swings may still be large in the coming sessions.  Over the medium- and long-term, volatility is mean reverting, though it does not appear to hold for foreign exchange prices.”