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.
GBP/USD
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.
UK 100
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
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.
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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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