Brexit is a term that has been heard very often recently: it refers to the fact that Britain may soon withdraw from the European Union. This possibility is taken very seriously by economic operators, many of whom are already working to put in place a strategy to avoid being caught off guard when the time comes. The IG online broker is not to be outdone and is already preparing its investors…
In particular, the operator offers comprehensive information on Brexit… What is it really about and what would be the impact on the financial markets?
Brexit is the amalgam of “Britain” (in reference to Great Britain) and “exit” (for exit). This term is used to designate the possible exit from the monarchy of the European Union. It should be noted that this is not new since the subject has already been raised in 2013 by David Cameron.
The latter had made the promise in the event of a Conservative victory following the general elections held in 2015. That same year, the Queen announced the draft law on the EU referendum in her speech. And the project seems to be on the verge of becoming a reality.
In any case, David Cameron supports the idea of remaining in the EU, focusing instead on negotiations on the country’s conditions of attachment to Europe, including reform of links with other Member States. However, the British Prime Minister has been subject to many criticisms. At the same time, the “pro-Brexit” soon became known. There are personalities such as Theresa Villiers, Michael Gove and Boris Johnson (who is none other than the Mayor of the City of London).
The effects are already being felt
The day after the referendum was announced, effects have already been felt on the financial markets. In particular, the British pound has fallen to its lowest level in 7 years. This is because investors around the world do not particularly like Brexit. The exchange rate of the pound sterling is likely to be even more volatile before the referendum.
In any case, the extent of the consequences of this event is not yet well known. In any case, traders will be closely following the evolution of the British currency, especially those trading on the Forex market. While the price has now stabilized, the foreign exchange market is likely to be in turmoil during and especially after the referendum. And in addition to the variations in the pound sterling, financiers are also interested in those of the FTSE 250, a British stock market index strongly influenced by Europe.
A long-awaited referendum
The referendum inviting the British to express their willingness to leave or not leave the European Union is scheduled for 23 June 2016. If the country stays in the EU after the vote, the financial markets should not be turned upside down too much. The opposite is to be feared if Britain emerges from it, something that would then happen as early as 2018.
And before the D-day, investors must be on the lookout. In particular, it should be noted that the campaigns started on 15 May 2016, for 5 weeks punctuated by debates and arguments. One thing is certain: everyone is asking questions and many people are going to be negative, fearing the outcome of the vote. In any case, turmoil is expected on the financial markets from 24 June 2016, the day after the vote. However, we do not know whether the volatility will be temporary or persistent…
You can also take advantage of Brexit depending on your bank’s offer. For example, on BforBank, an advisor can assist you on the markets and guide your investment portfolio as best as possible.