Brexit on The Trading Charts

Brexit: Like a rollercoaster that won’t end. There continues to be many twists and turns, but what exactly is happening and what can we brace for next? As a content marketing agency for the finance sector, we’ve got our eyes on the ball… even if it is a Brexit yoyo. In fact, we provide forex and crypto analysis, so we really have been glued to the trading charts. Let’s delve deeper into a world of Brexit on the trading charts. * Check back as we update this article*

A Brexit Recap

On June 26, 2016, the United Kingdom went to the ballot to vote on the future of the country’s involvement in the European Union. The result of the closely-watched vote was surprising to most people, including those who voted for the country to exit the European Union. In the aftermath of the vote, sterling dropped by 10% and reached a 31-year low as traders grew considerably concerned about the country’s future. Brexit had begun – but little did anyone know about the saga that would follow.

Before Brexit

Think carefully and you might just remember a time before Brexit and tweets like this…

Oh, and this… the Referendum really threw a spanner in the works, didn’t it?!

Brexit silence seems like a faint memory, we know! But as hashtags such as #brexitshambles #brexitvote #exitfrombrexit and #brexitmeansbrexit remain prominent online, it’s important not to lose sight of where it all began and why people are so passion about Brexit topics. So, here’s a rundown of the essential background stuff.

  • UK Referendum Talk Bubbles

In January 2013, British Prime Minister David Cameron delivered a speech on the future of the United Kingdom in the European Union. The speech was held at Bloomberg’s offices in London during which Cameron expressed his desire for a referendum.

Brexit on The Trading Charts- on this day, the British pound dropped by 8% from 1.6385 to a low of 1.5072. Shortly afterwards, sterling regained momentum and in July 2014, the currency reached a multi-year high of 1.7237 against the US dollar. At the time, polls showed that most people in the United Kingdom favoured staying in Europe. Still, most of them wanted to see changes implemented to improve the relationship.

On April 14, 2015, the pound sterling started moving lower as the Conservative Party released its manifesto for the election. The manifesto called for a real change in the country’s relationship with the European Union. It also reiterated the earlier desire by David Cameron to have a referendum. This referendum would decide on whether the UK would continue being part of the European Union. The losses continued after the May 7 general election.

After winning the election, Cameron started negotiations with the European Union on what needed to be changed. The first European Council meeting happened on the 25 June and another one happened on October 19. In the latter meeting, he delivered a speech on the four things he wanted. These were competitiveness, sovereignty, free movement and social benefits. As these negotiations went on, sterling declined because Cameron could not secure a deal with the EU. The period ran until February 2016, when Cameron announced a referendum date. As a result of the announcement, sterling rose because polls showed that more people favoured remaining in the EU.

Before Article 50

 

  • The Referendum Becomes a Reality

On the 23 June 2016, UK voters went to a referendum on a day that’s been marked in the history books forever. Before this date, polls showed that the remain side would win, albeit with a small margin. Almost all polls showed that more people wanted to remain. The remain campaign was led by David Cameron. It was supported by key international figures like George Soros, Angela Merkel and Barack Obama.

The leave side was led by the likes of Boris Johnson and Nigel Farage. This side argued that the country would do better as a standalone country instead of being in a large bureaucratic organisation headquartered in Brussels. This case was cemented by the increase of foreign migrants, who were supported by the European Union.

  • The Leave Campaign Wins

On the June 24, 2016, Brexit on the trading charts saw the sterling drop by 10% and reach a 31-year low against the USD. This was after the total vote count showed that the leave side had trounced its rivals by 3.8%. Those wanting to leave the EU came commanded 51.9% of the vote compared to the remain side, which had 48.1% of the total vote. Cameron announced his resignation shortly afterwards.

Social media lit up with mixed opinions…

  • Theresa May Takes the Stand

On July 13th, 2016, Theresa May became the next Prime Minister. Previously, May had campaigned for the UK to remain in the European Union. In her maiden speech, she reiterated that she would help the UK leave the European Union as mandated by the voters. As this went on, sterling continued declining. Ultimately, it reached the lowest level of 1.1636 on October 3, 2016. This was after May delivered a speech at the Conservative Party conference where she announced the Great Repeal bill. She also confirmed that Article 50 would be triggered in March.

In January 2017, a few things happened. Theresa May gave a speech at Lancaster, where she set out the priorities that the government would use to negotiate with the EU. On January 26, the pound sterling remained unchanged after the government published a notification of the withdrawal bill. Shortly afterwards, in February, the government published the Brexit white paper. This paper outlined the strategy the government would use to leave the EU.

On March 16, the withdrawal agreement received the Royal Assent and sterling remained unchanged. On March 29, sterling rose after the Prime Minister triggered Article 50.

The currency rose because the market was already expecting it. As such, it was not thought to be a big deal.

Past Article 50

Shortly after triggering Article 50, Theresa May called for a general election. Her hope was to use this opportunity to increase her mandate in the UK Parliament. She called for a general election on April 18. The election was held on June 8, 2017. It resulted in a ‘Hung Parliament’, with Conservatives losing votes. This led to a sharp increase of the pound sterling.

Shortly after the election, Theresa May formed her cabinet and negotiations with the EU started. The first round of negotiations happened on June 19. On July 13, the government introduced the Great Repeal bill to Parliament. This happened ahead of the second round of negotiations. It laid down the UK approach on ongoing judicial and administrative proceedings, nuclear materials, and privileges and immunity. The second round of negotiations took place on July 14, 2017. These negotiations continued until June 26, 2018, when the withdrawal agreement received Royal Assent.

Sterling reached its highest level since Brexit in April 2016. This was after the European Union voted to agree on a framework of a future relationship with the UK.

Past Chequers Meeting

It was a warm summer’s day, the UK had run out of BBQs and everyone was heading for the nearest water hole to cool off. Meanwhile… on July 6, 2018, the cabinet met at the Prime Minister’s country house retreat known as Chequers. In this meeting, the cabinet agreed on proceeding with the Brexit negotiations. Three days later, Brexit Secretary, David Davis resigned in protest of May’s deal.

He was replaced by Dominic Raab, who resigned on November 15 and was replaced by Stephen Barclay.

The shape shifting cabinet, of course prompted a host of online humour – it was either laugh, or cry!

On November 14, the EU and the UK reached a deal. On November 25, the European Parliament voted to pass the deal. Between the Chequer’s meeting and November 25, sterling was on a downward trend. It received some short-lived recovery after rumours of a deal.

The ball was in the House of Commons after the EU Parliament voted for the deal. The country was supposed to leave on March 29, 2019. To do this, Theresa May needed votes in the House of Commons. However, her deal faced significant criticism mostly because of the backstop clause. This was a clause which would prevent a hard border between Northern Ireland and the Republic of Ireland. Northern Ireland is part of the UK while the Republic of Ireland was in the European Union. The EU insisted that Northern Ireland or the entire UK would remain in its customs union. They argued that if Northern Ireland was excluded, its tax regime would disadvantage the EU.

On January 15, the government lost Theresa May’s Plan A. She lost because a good number of Conservatives and the influential Democratic Unionist Party (DUP) did not support the agreement. In response to this defeat, the pound sterling dropped slightly. The drop was not very significant because the market had priced-in the situation. Four days later, the Prime Minister survived a vote of no confidence.

On February 14, the House of Commons voted for Theresa May’s Plan B. Again, the government lost the vote by a wider margin. At this time, the clock was ticking. On March 12, the government lost another vote. Two days later, the UK Parliament voted and authorised the government to ask the EU for an extension. This extension was granted to April 12. A failure to clinch the votes would have led to leaving without a deal on May 22. On March 29, the government lost another vote. On May 21st, the government unveiled another plan but did not present it to Parliament. The pound sterling, which was previously consolidating, saw significant declines.

  • Boris Johnson Replaces May

On July 29, 2019, Boris Johnson became the new Prime Minister and the pound sterling continued to decline. This is because Johnson had pledged to exit the EU with or without a deal. On September 2, sterling started to rally as negotiations with the EU continued. The supreme court had also ruled that Johnson’s decision to prologue Parliament was unlawful.

Where we are and what next?

On Tuesday October 22, 2019, the UK Parliament voted in support of Boris Johnson deal. This was his first major victory. However, it lasted for just 15-minutes because members rejected his timetable for Brexit. Johnson’s goal was to have everything done so that the country could exit the EU on October 31, 2019.

Boris Johnson also called for an election to be held on December 12. This has so far been rejected by MPs.

After Brexit

A lot could change. However, if things stay as they are, the following will happen if Johnson’s deal and amendments pass Parliament and are accepted by the European Union.

Shortly after the vote passes, the two sides will start a far-reaching trade negotiation. These negotiations will aim to establish the mechanisms in which the two sides will continue doing business with each other. During this time, the UK will continue doing business with the EU freely.

This transition will end on December 31, 2020. While the UK’s departure has been delayed, the December 2020 deadline has not changed. Still, the treaty signed between May and the EU said that this transition period could be extended.

Finally, the UK will completely exit the European Union on December 31, 2022.

And breathe. Following Brexit certainly requires patience, energy – and a big bucket of popcorn. The good news is, we love a snack and keeping up with all the breaking news, social updates, market movements and more. Contact us today for crypto or finance analysis. We offer everything from daily forecasts and reviews to monthly outlooks as well as day-to-day social updates and financial content marketing that will work hard for your brand. Loved reading Brexit on The Trading Charts? Hit share and check back as we update the article.