Brexit, what Brexit? - Forex News by FX Leaders

Brexit, what Brexit?

Posted Thursday, September 1, 2016 by
Skerdian Meta • 2 min read

In how many stages can we divide the post-Brexit referendum period? Anyone? It´s easy, for the time being, we can divide it in four stages. I am saying for the time being because we can´t predict all the twists and turns which might come along the way until the Brexit process and it´s lasting effects are over. After all, this is the first time that a country leaves the EU, especially a big one.

So, which are these four stages of Brexit you´d ask. The first stage was the immediate aftershock stage which lasted a few days after the referendum when the GBP plummeted about 20 cents. We can count the pre Brexit referendum as the first stage but no one truly believed it would happen, so the situation was relatively calm until the referendum day. 

The second stage was the phase when panic gripped the businesses, which lasted about a month during July. The businesses reduced their working capacity and detained their investments. As the UK economic data for August showed, the business side of the British economy fell in deep contraction. But, that only lasted about a month so far.

We are entering the third stage now. The consumer side of the economy remains strong, which is helping the business side become more confident and write off the judgment day scenario. The panic is wearing off and the business operations are going back to normal. The manufacturing data that was released a while ago showed that Britain won´t just disappear off the stage and this Brexit process can be anything but straightforward. This makes it difficult to predict the next move and take sides.

In the fourth stage, we will see the real Brexit effects. That´s the period after the UK actually leaves the EU, which might take a couple of years. We will see how the new international trade agreements and conditions will affect the UK economy. But that stage is not clear either because we don´t know what the new agreements will be, how Brexit itself will be and many more things which might come up along the road. So, let´s just take one step at a time and for now let´s concentrate on the second and third stage.

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About the author

Skerdian Meta // Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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