Brexit – What can we expect now? Summary of current situation

The United Kingdom is historically first country ever which plans to step out of the European Union. In order to get out, they firstly need to activate so called article 50 of the Lisbon Treaty which has never been activated before. Once this happens the UK will have 2 years (maybe longer) period of time in which they have to make deals with every other country of the EU. However there a lot of concerns that the negotiations on new trade links during this period will not go entirely smoothly. And why? Simply because the European Union will want to discourage any other country which would consider leaving the EU.

How current situation looks like?

At the moment the situation is very uncertain and it shows not only the UK market but also the European market. We get into a situation where we have a huge amount of unresolved questions with no answers whatsoever. The only thing which is already clear now is that David Cameron will no longer be the British Prime Minister. He had announced his resignation shortly after the voting results came in. As a supporter of the UK remains party he has failed and therefore he will leave his in September. All negotiations with other EU states will be a burden of his successor.

Questions, questions and more questions

Voting results were very balanced, but at the end 51.9% people of the United Kingdom voted for brexit and 48.1% against it. However the greater part of the population of London, Northern Ireland and Scotland chose to stay in the EU which raises a huge amount of interesting question. Such as whether the United Kingdom stays as a single entity, or whether the Northern Ireland will for example unite with Scotland in order to stay together in the European Union. First Minister Nicola Sturgeon expects most likely second Scottish independence referendum on remaining in the EU even at the cost of leaving the UK. The preliminary results say that supposedly 60% of Scots would stay behind this decision. Also we have in the air the question of whether English remains to be the official language of the EU, since no other member country of the European Union has English as its official language. Even if the Irish would disengage from the UK they still have as their official language Gaelic. Therefore it’s only up to the rest of the EU countries whether they decide to use English even after brexit. Let’s have a look, how exactly the pool results of brexit ended up in all four countries of the UK.

For remaining in the EU („remain“) For leaving the EU („leave“)
England 46,6 % 53,4 %
Scotland 62,0 % 38,0 %
Northern Ireland 55,8 % 44,2 %
Wales 47,5 % 52,5 %
Celkem 48,1 % (17,4 million) 51,9 % (16,1 million)

What assets experienced a decrease and which a growth?

Greatest declines could be observed in the Europe. Unsurprisingly we could see a drop of the pound along with the euro. Regarding equities, the largest declines we’ve seen primarily in French stocks and in PIIGS countries stocks (ie Portugal, Italy, Greece, Spain and Ireland). Greece experienced a decline of stocks by a 13.7%, Italy by a 12.5%, Spain by a 12.4%, Ireland by a 9.7% and France by an 8.0%. Shares of the UK (FTSE 100) fell only by a 3.2%. On the other hand, there were also the Scandinavian countries, namely Sweden and Finland, which registered a slight increase in the shares by a 1%. When we look at other underlying assets we could notice 2 currencies which went up very high, it was the US dollar and the Japanese yen . And as it always happens in times of uncertainty – gold. went up.

Quote at the end

However this whole situation results, so I like this tweet from Fred Wilson which I would like to share with you “It is Important on days like today to remember That Change Creates Opportunity and Opportunity can create wealth if approached Correctly. “

Author: Michael
Hi, I'm Michael and my area of expertise is forex and cryptocurrency trading. I specialize in technical analysis, namely in chart pattern setups. I educate traders of all levels and I believe that prerequisite to successful active trading is always knowing risks of the game. My most current interest lays in cryptocurrencies, especially in Ethereum and in decentralized applications. I do not give investment advice, but for general inquiries please use the comment section under any article.

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