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    The Biggest Brexit Beneficiary would be


    USDJPY, Daily         

    The Japanese Yen

    The fallout on Friday from a Brexit vote would reverberate around all financial markets, from Commodities to Stocks to Bonds and of course Currencies.  There would be winners and loser’s huge volatility and certain uncertainty. The vote is far too close to call but my view remains (no pun intended) that the UK population, with 10-11% of the electorate still undecided, will decide its “better the devil you know” and vote to Remain in the EU.

    One day to go now and the polls continue to point to a too-close-to-call outcome. The FT’s poll tracker is showing Leave with 45% support and Remain with 44% support, with the former gaining one percentage point at the latest update. UK bookmaker Ladbrokes continues to show an implied probability of the UK remaining in the EU of 76%, unchanged from yesterday and showing a much more confident view than polls would suggest on the idea that the status quo option in referendums tends to have the advantage. While the possible market reactions on Friday are clinically polarized — the one being a sterling and euro risk-on trade and the other being a sterling and euro negative risk-on trade — there is also a likelihood of protracted uncertainty if the Remain side win by only a narrow margin. This would embolden Brexiters, embittered after the loss, to carry on the fight. This could in turn maintain longer-term uncertainties for sterling markets.

    All that said the greatest beneficiary of a Brexit is the Japanese Yen, Swiss Franc and GOLD. Of the three the YEN would appreciate furthest even with BOJ intervention.  USDJPY 101.90 – 100.90 remains a possible intervention zone prior to the key psychological 100.00. Further down 98.20 and even 95.00 are not unrealistic. In an uncertain post Brexit world risk off would prevail for some considerable time.

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    Stuart Cowell

    Market Analyst 


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