Brexit: signed, sealed, delivered

As the UK departs the EU with a trade deal, what does 2021 hold in store for GBP and UK shares?

The background on Brexit

The UK left the EU on 31 January 2020 and began an 11-month transition period, effectively remaining in the EU's customs union and single market while the government negotiated its trade deal. Whether or not one is reached, Brexit promises to be the most significant event for Britain in modern history – so stay ahead of trading opportunities throughout the final transition.

Top 10 Markets

GBP/USD

GBP/USD

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GBP/USD

The pound’s almost physical link with Britain’s economy and sensitivity to politics makes sterling the principal arena in which sentiment on Brexit plays out. Since sterling is most liquid traded against the dollar, anything happening in the pound tends to happen to GBP/USD first and most clearly.

GBP/JPY

GBP/JPY

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GBP/JPY

The volatile yen often means the pound’s moves within GBP/JPY are bigger and faster than against any other major currency. The yen’s safe-haven characteristics can also make GBP/JPY a useful gauge of the depth of sentiment for or against sterling.

EUR/USD

EUR/USD

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EUR/USD

The single currency’s most-liquid pair is against the dollar. Naturally, that means EUR/USD is often prone to influences from outside of the Eurozone and the UK. However, the UK’s relationship with Europe also plays an unmistakeable part in steering EUR/USD.

EUR/GBP

EUR/GBP

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EUR/GBP

This is a vital part of the sterling/euro complex, with traders often recycling strategies through all major markets of the euro and pound. Additionally, as a ‘pure’ Brexit market, EUR/GBP provides a clearer insight into euro and sterling sentiment than other crosses.

UK 100

UK 100

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UK 100

The benchmark cannot escape Brexit despite the bulk of its companies’ revenues being derived in currencies other than sterling. This is because of a frequent inverse relationship between the UK100 and the pound. Hence what’s good news for the pound is often ‘bad news’ for the UK100 and vice versa, from one day to the next.

Germany 40

Germany 40

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Germany 40

The most-traded index in Europe is also frequently at the heart of the Brexit action, though it’s worth bearing in mind that it is also strongly tied to global stock market sentiment and the fortunes of 30 giant German companies.

Lloyds

Lloyds

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Lloyds

Britain’s biggest domestically focused bank is also top UK residential mortgage provider. The lender’s fortunes are inextricably linked with Brexit news.

Barclays

Barclays

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Barclays

Barclays’ large UKdeposit base is a key to Britain’s economy and politics, but the stock also has a large proportion of the United States, where the bank makes most of its revenues.

Tesco

Tesco

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Tesco

Britain’s biggest retailer handles more pounds than most global corporations. And since consumers often express their hopes and fears on the high street, Tesco is a sound way of gauging Britain’s mood about Brexit.

Barratt Developments

Barratt

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Barratt

The largest residential property developer in the UK plays a similar role as Tesco. Furthermore, as immigration patterns change in relation to Brexit including the ability of its industry to source skilled workers from the EU Barratt investors try to adjust.

Brexit call to action

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How will Brexit affect GBP and other markets?

What market movements to expect in the run up to 1st January 2021 depending on whether the UK and EU can reach an agreement in negotiations:



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