AvaTrade - Analytics


    246.25 8.75/10
    100% of positive reviews

    Brexit for Beginners

    For those of you who thought you had read everything about Brexit, and for those who have been avoiding the topic, here’s a little review and some analysis.

    What does Brexit mean?
    Brexit is a word that has become used as a shorthand way of saying Britain leaving the EU — merging the words Britain and exit to get Brexit, in a same way as a Greek exit from the EU was dubbed Grexit.

    The European Union — commonly known as the EU — is an economic and political partnership involving 28 European countries. It turned the various countries into a “single market,” allowing goods and people to cross borders, as if the member states were one country. It has its own currency, the Euro, which is traded against other major world currencies.

    The key date is coming up this Thursday, 23 June, with a referendum being held in Britain to decide whether they should leave or remain in the European Union. The extent to which Britain is being rocked by this can be seen in the horrific killing of MP Jo Cox.

    What are the Positions?
    Those who call for “exit” believe Britain is being constrained by the EU, which they say has too many rules for businesses and levies billions of pounds a year with little in return. Perhaps even more significantly, they also want Britain to take back control of its borders. Free movement is a hallmark of being an EU member; one doesn’t need a visa to travel. In today’s evolving world, the wisdom of open borders is open for debate.

    Those who want Britain to remain in the EU see the same facts as an advantage: It is easier to do business within the EU if Britain remains a member. Further, in order to have economic growth there needs to be a steady supply of ambitious laborers. In addition, if Britain exits, there is a fear that their standing in the world marketplace would be greatly diminished.

    This UK referendum, coming one year after the Grexit vote, is rooted in different internal factors than Greece. And the departure of either country would have a different impact on the EU, let alone on their own countries. But there is a genuine fear of further disintegration of the EU. Other countries, from the Netherlands to Poland, are now considering whether they want to jump ship too.

    If Brexit passes, and the UK leaves, conventional wisdom says the Pound and the Euro would again crash; conversely, the US dollar would rise, and gold would make new recovery highs. Worldwide, stock markets would crater and bond prices would rise as investors seek a safe haven to park their money.

    Personally, I have had enough of the Brexit debate. The debate really began intensifying in late February when the GBP/USD dipped below 139. Since then opinion poll after opinion poll has been quoted to keep our interest focused. Politicians from everywhere were trotted out in opposition to Brexit. Even US President Obama weighed in with his implicit threat: Leave, he said, and the “UK is going to be in the back of the queue” on trade deals with the U.S.
    I guess he had to put his two cents in before he got “trumped” on the matter.

    My opinion: Brexit will go the way of the Grexit.
    People are fearful of change. Despite current polls showing the vote even, I believe they will vote a resounding “NO” to Brexit. The markets will return to “normal.” The press, the politicians and the pundits will have to wait until the next crisis to rally around a cause. Maybe the US will want to adopt the Euro?

    How are the votes counted? Vote counting will begin as soon as the polls close at 10pm BST on Thursday, June 23 at 382 local centers around the UK.

    How soon will we know the result? It is expected that by about 4am BST we should get a clear idea of what the result is likely to be. Anyone waiting up?

    To leave a comment you must or Join us

    By visiting our website and services, you agree to the conditions of use of cookies. Learn more
    I agree