How to Profit from the EU Referendum?

This is a discussion on How to Profit from the EU Referendum? within the Economic & Fundamental Analysis forums, part of the Methods category; Originally Posted by hhiusa @ tomorton Does this mean that you want the UK to stay in the EU? Do ...

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Old Mar 5, 2016, 5:16pm   #16
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Originally Posted by hhiusa View Post
@tomorton

Does this mean that you want the UK to stay in the EU? Do you think UK will leave the EU?

What do you think will happen to the value of the pound if there is a Brexit?

I think there's money t be made regardless of what I think.

However, what I think is -
the UK should remain in the EU
the referendum result will be to remain in the EU
if there is a Brexit referendum result, the GBP will probably have bottomed by the time of the official announcement.
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Old Mar 5, 2016, 6:20pm   #17
 
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I think there's money t be made regardless of what I think.

However, what I think is -
the UK should remain in the EU
the referendum result will be to remain in the EU
if there is a Brexit referendum result, the GBP will probably have bottomed by the time of the official announcement.
You seem pretty certain that the UK will stay in the EU. What makes you so certain?

Buy your reasoning, does that mean that we should see a spike in the value of the pound if they decide to stay in the EU?

If UK does leave the EU, and you believe the pound will plummet I also believe that euro will plummet as well. I think the euro will be hurt more than the pound will.

I am hoping that the UK decides to leave the EU. I believe this will benefit non-EU currencies.
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Old Mar 5, 2016, 10:41pm   #18
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The pound will recover if it becomes clear to the market the referendum is going to be a stay in result and/or if the pound has simply reached a technical level that's good for the big players to buy in at for the long term. These points could be well before the referendum date, the results will already be price in by the time the count starts. Meantime, uncertainty makes it a sell.

Yes, the euro is strongly coupled to the pound and to London. I believe that more euros are traded in London per day than traded plus spent in the whole of the euro-zone. EUR/USD took a big hit as soon as the referendum date was confirmed. Its hard to think of a currency linked to the GDP of an economic union getting stronger when one of its best component economies has just departed.
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Old Mar 5, 2016, 10:48pm   #19
 
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Originally Posted by tomorton View Post
The pound will recover if it becomes clear to the market the referendum is going to be a stay in result and/or if the pound has simply reached a technical level that's good for the big players to buy in at for the long term. These points could be well before the referendum date, the results will already be price in by the time the count starts. Meantime, uncertainty makes it a sell.

Yes, the euro is strongly coupled to the pound and to London. I believe that more euros are traded in London per day than traded plus spent in the whole of the euro-zone. EUR/USD took a big hit as soon as the referendum date was confirmed. Its hard to think of a currency linked to the GDP of an economic union getting stronger when one of its best component economies has just departed.

Not if dragging / lagging countries like the UK and Greece exit and core members remain making the union stronger.
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Old Mar 5, 2016, 11:09pm   #20
 
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Originally Posted by tomorton View Post
The pound will recover if it becomes clear to the market the referendum is going to be a stay in result and/or if the pound has simply reached a technical level that's good for the big players to buy in at for the long term. These points could be well before the referendum date, the results will already be price in by the time the count starts. Meantime, uncertainty makes it a sell.

Yes, the euro is strongly coupled to the pound and to London. I believe that more euros are traded in London per day than traded plus spent in the whole of the euro-zone. EUR/USD took a big hit as soon as the referendum date was confirmed. Its hard to think of a currency linked to the GDP of an economic union getting stronger when one of its best component economies has just departed.
I agree with you. The UK is one of the biggest component economies in the EU. The EU will lose a huge chunk of revenue, if it leaves. What hurts one of the countries, hurts them all. 80% of Greek imports are from the UK. This means that they are essentially getting those items at a discount because they are both members in the EU. If the UK leaves, it will become more expensive for Greece. When Greece is hurting financially, the Euro Zone will hurt financially.

The UK and Germany are the only two economies in the EU that matter. Even if the UK's economy and currency drop a little, I believe in the long term, they both will stabilize. However, this cannot be said for the EU if the UK leaves.

By non-EU currencies, I was referring to the Norwegian Krone, the British Pound (if it leaves), The USD and to some extent the Swiss Franc. Norway has never had any of the supposed advantages of trade within the EU because they are not in the EU. Their economy will weather the storm just fine. They have plenty of natural resources, namely oil.

I hope and foresee the UK leaves the EU. In that event, the NOK should soar relative to the euro. I expect the GBP to plummet from the exit, creating an amazing buying opportunity for when the British economy finds its feet and soars to new heights without the lead anchor that is the EU.
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Old Mar 7, 2016, 8:51pm   #21
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I believe if Britain leaves the EU the pound and the EUR will both bottom out from the initial shock, but then I believe both currencies will eventually recover. One of my chief concerns however would be that the pound would have a slower recovery due to uncertainty of the economy and free trade agreements with the rest of the world all of which would have to be renegotiated which could take years. Further uncertainty would likely cause the pound to depreciate due to the fact that in the event of a Brexit. It is also likely that the UK would break up into the United Kingdom of England, Wales and Northern Ireland and the Kingdom of Scotland. Still under the same monarch strangely enough, so these uncertainties would potential destroy the value of the pound. All that said I would go with the bookies.
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Old Mar 7, 2016, 9:52pm   #22
 
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I believe if Britain leaves the EU the pound and the EUR will both bottom out from the initial shock, but then I believe both currencies will eventually recover. One of my chief concerns however would be that the pound would have a slower recovery due to uncertainty of the economy and free trade agreements with the rest of the world all of which would have to be renegotiated which could take years. Further uncertainty would likely cause the pound to depreciate due to the fact that in the event of a Brexit. It is also likely that the UK would break up into the United Kingdom of England, Wales and Northern Ireland and the Kingdom of Scotland. Still under the same monarch strangely enough, so these uncertainties would potential destroy the value of the pound. All that said I would go with the bookies.

EU GDP = $14 Trillion (2014)
UK GDP = $2.7 Trillion (2013)

Either way, why hold sterling when one can hold Euros???

Any laggards leaving the Euro will only strengthen the remaining existing countries commitment and the Euro.

Why hold small countries currency that has uncertainty and risk associated with it compared to more widely accepted currency??? This is a no brainer but the exit camp may argue otherwise. Lot of hot air imo. Some people simply do not understand currencies.

Fact! USD and Euros accepted by much bigger block of countries and thus inherently less risky.

Euro holds 1.10, sterling has sunk to 1.39 at the hint of a possible brexit vote. Will sink even more if it ever happens for real. Market has stated already stated the outcome from a Brexit vote. What others say about sterling strengthening and UK doing better is wishful thinking and just pure hyperbole.
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Old Apr 16, 2016, 9:24pm   #23
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Imo, dont leave it to guesswork, 2 separate s/b accounts with tight spreads and guaranteed stops, set stops at a decent distance and calculate total exposure should price bounce off both, this is your worst case scinario...then long eur/gbp with one account and short the other account, got to be looking at a 100 + pip move on the result announcement....
is guaranted stop neccesary because of possible slippage? i wonder what would stop be like 30 point 5 min before the results? its long time to go to prepare strategy, but has to be good one though-
thanks.

Last edited by dolphie; Apr 16, 2016 at 9:32pm.
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Old Apr 17, 2016, 7:57am   #24
 
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Originally Posted by mike. View Post
Imo, dont leave it to guesswork, 2 separate s/b accounts with tight spreads and guaranteed stops, set stops at a decent distance and calculate total exposure should price bounce off both, this is your worst case scinario...then long eur/gbp with one account and short the other account, got to be looking at a 100 + pip move on the result announcement....
Think you have a winning strategy here.
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Old Apr 17, 2016, 10:13pm   #25
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is guaranted stop neccesary because of possible slippage? i wonder what would stop be like 30 point 5 min before the results? its long time to go to prepare strategy, but has to be good one though-
thanks.
Okay i understand now the need for guaranted stop-... I witnessed how market opened at gap just for all cad...
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Old Apr 17, 2016, 10:47pm   #26
 
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The Bremain camp is just worried that their families will have to get visas and that the UK might actually do well without the EU. I remember when football clubs actually had players from where the team was located. Now there are all sorts of players from all over the globe playing in the EPL, which seems counterintuitive. British football should be a representation of and have British talent. The Bremain camp can only use fear tactics to say the GBP might drop in value. Cameron is just worried he will have to resign if the Brexit happens. He spent £9,000,000 mailing pamphlets for the Bremain campaign. What a waste of taxpayer money. The prime minister should not be openly for or against the Brexit.

Even if the pound falters for a little while it will find its footing and increase in value again. When the fear mongering has been proven to have no merit, the pound will soar.
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Old Apr 18, 2016, 12:23am   #27
 
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Old Apr 20, 2016, 3:20am   #28
 
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I hope and foresee the UK leaves the EU. In that event, the NOK should soar relative to the euro. I expect the GBP to plummet from the exit, creating an amazing buying opportunity for when the British economy finds its feet and soars to new heights without the lead anchor that is the EU.
I agree with your GBP forecast. If they exit, GBP should drop further. But not too much for the EUR.
I think on exit GBP drops another 10-15%, then stabilize. Global markets will drop, possibly UK more then the rest.

Economic impact will be biggest for the UK, since they will have to setup extra trade agreements etc. The lover GBP should give the UK an edge though and this would probably mean a buying opportunity in FTSE.

Any drop in equity markets on exit will be temporary in my view. I think the economic impact is not that significant. It's mainly a political issue. Any economic links currently existing will be put back to work through trade agreements.

If no exit > GBP back up 5% initially and gradually another 5%. Stock market might jump from relieve, but not significantly. Any jump over 2% should backtrack...

I just think it's not that big of a deal... main problem arising from exit will be visa related and some extra temporary issues on trade.
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Old Apr 20, 2016, 3:44am   #29
 
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I agree with your GBP forecast. If they exit, GBP should drop further. But not too much for the EUR.
I think on exit GBP drops another 10-15%, then stabilize. Global markets will drop, possibly UK more then the rest.

Economic impact will be biggest for the UK, since they will have to setup extra trade agreements etc. The lover GBP should give the UK an edge though and this would probably mean a buying opportunity in FTSE.

Any drop in equity markets on exit will be temporary in my view. I think the economic impact is not that significant. It's mainly a political issue. Any economic links currently existing will be put back to work through trade agreements.

If no exit > GBP back up 5% initially and gradually another 5%. Stock market might jump from relieve, but not significantly. Any jump over 2% should backtrack...

I just think it's not that big of a deal... main problem arising from exit will be visa related and some extra temporary issues on trade.
Additionally, a cheaper GBP should make trade and business in the UK more attractive. I think it will be a win the for the economy.
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Old Apr 20, 2016, 11:35am   #30
 
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The UK has a negative current account deficit in BoP and has done for almost a century.

The service sector and finance contributes but does not quite balance the books.

So anyone who thinks £terling will strengthen after a little dip is walking on hype of air.


Recently, the out-camp has been rubbishing the many articles explaining how the UK will most certainly will be impacted in a very negative way. IMF, Oxford Economics, Government analysis, the CBI and Mr Carney at the BoE. We are told these established reputable bodies are all out to scare us.

One crack-head said UK will benefit from lack of regulation when out from the EU!!!

Let's think about this for one short second. There is the EU block with a massive pot of disposable income. So if the UK wishes to continue trading with the EU, then it will still need to adhere to those standards and conditions with a tarriff slapped on it.

Then the UK can go away and engineer unilateral trade agreements with all the other countries.

The rational and reasoning for the economic argument is just crazy imo.

Political implications may have some limited argument for due consideration around sovereignty but it is an ineffectual minor one of no consequence imho. That's about it.

Self serving crooks in Parliament who want to play with their little games

Last edited by Atilla; Apr 20, 2016 at 1:47pm.
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