Sunday February 21, 2016 - 12:04:36 GMT
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Brexit Referendum and its Impact on Sterling
In the US, there is a tradition on February 2 called Groundhog Day. On this day, if it is sunny when a groundhog comes out of its burrow and sees its shadow, it signals six more weeks of winter. If it is cloudy and the groundhog does not see its shadow, it signals an early spring.
Well, UK PM Cameron emerged from the EU summit on Friday with concessions in hand and called for a June 23 referendum on Brexit. This is a term being used for whether the UK should stay or exit the European Union. While Cameron saw his shadow and claimed this to be a sunny day, those favoring #Brexit saw it otherwise, suggesting four more months of uncertainty ahead of the referendum.
While the GBP reacted positively to end last week over relief that UK Cameron was able to come away from the EU summit with an agreement, this only sets up what will be a heated battle over Brexit during the next four months. What this means for the GBP and the forex market is more uncertainty and watching the latest survey polls. This suggests a market where you have to be aware of when the next poll is coming out as the forex market will react to the latest headline.
This also suggests a market of little conviction until one or the other side takes the upper hand in this historic event. Given how pollsters blew the last national election by calling the outcome wrong, caution is advised but the forex market, which is hooked on news headlines, will nonetheless be hyper sensitive to what Brexit polls show. So fasten your seat belts as this is going to be a bumpy ride,
Visit the Global-View Forex Forum for the latest Brexit news and its impact on sterling.
Jay Meisler, co-founder
Global-View.com
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