Brexit – is it now or… later?

Brexit – is it now or… later?

04 March 2019 from Anna Svahn

On June 24, 2016, the Swedish private investors kept their spirits when they commuted between the hub and herring and to look at how the London Stock Exchange fell in the bargain along with the pound that collapsed by 9 percent. Bank shares took the most rapids and initially fell by 20 percent. The fear of what would come would thus have set their teeth in markets around the world but the dip buyers were quickly in place and with the hand in hand the earth did not go in then either.


Today, almost three years later, negotiations for Britain's exit from the EU are underway. UK Prime Minister Theresa May has found it difficult to get support for her proposed Brexit agreement. Until now, May has stubbornly withdrawn from the EU even though it would be a non-contractual one, but has just opened up for extended withdrawal negotiations with the EU if Parliament does not approve of its proposed Brexit agreement.

GBP/USD has been weak since the peak in July 2014 and dropped as I mentioned above 9 percent after the Brexit vote in the summer of 2016. That Pound strengthened in recent days is mainly due to Theresa May offering Parliament to vote on an extension of Brexit.

Mini futures on Exchange rates

Although May has opened itself up to postpone an exit from the EU, there is still a risk that the United Kingdom will leave the EU without agreement on 29 March. In such a scenario, Moody's claims that it could create negative pressure on UK banks 'profitability, but that the banks' credit foundations would nevertheless generally remain resilient. At the same time, Moody's does not believe that this will be the case, but rather we see an exit agreement comprising a transition period.

Regardless of whether Brexit is being implemented now, later, not at all, without an agreement or with such stands, the Bank of England is ready to stimulate the UK economy as needed. In any case, if the BoE at the same time manages to meet the inflation target, we must hope. What would still be the world without declining monetary value in different directions?

The fact that Brexit is significant for the UK is one thing but how does it really affect the global economy? Given that the UK is dependent on imports and imports almost twice as much as they export and 62 percent come from other EU countries, one can imagine that it will be tough in the short term. There is no doubt that some of the benefits of being part of a larger family come with the EU, but it also makes a lot of compromise.

Although Brexit has great significance for the UK and its inhabitants, the importance of the global economy's development is, after all, very small, much less than the media addresses the issue. If, on the other hand, you are really interested in factors that give real signal values about where the market is heading, you should instead throw an eye on Australia's exports to China. At the time of writing, China's largest port, Dalian Harbor, has stopped importing coal from the country across the earth, which could be a first sign of something much greater.

So, stop looking at Britain's EU ambivalence and instead follow the development of the Australian dollar and find out what it can say early on about global economic growth in the future.

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This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.

The products are not capitalprotected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.

19/09/2019 11:11:24

 

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