How Rexit will affect the currency market

Will markets suffer?

Stock markets are likely to be volatile this year, given the numerous elections in Europe and the establishment of a new administration in America, but nobody can say with certainty where markets such as the FTSE 100 will end. 

Dean Turner, an economist at UBS Wealth Management, explained that in itself Article 50 being triggered won’t have a significant impact.

“It’s fully expected. I don’t think there’s any expectation in the market now that it won’t be triggered.”

However, markets could suffer if negotiations prove difficult, while quick agreements on issues such as the mooted £50bn EU exit fee will likely result in a positive reaction. 

Clarity around how the negotiations are going may not appear until after the German elections in September, meaning markets should focus on fundamental measures such as earnings in the meantime, according to Mr Turner. 

In this scenario, the short term outlook could be positive. The earnings of FTSE 100 companies have been good, in part due to the rebound of oil and commodity prices. The weakening of the pound has boosted earnings too, and no major increase in the value of the pound is expected to derail that.