Thursday, June 16, 2016

Brexit? What Brexit?

In a few days the British will decide whether the UK remains a member of the European Union or leaves it. These days everybody seems to be fixated on that issue.
However, financial markets seem to be not bothered with a probable Brexit.

Let me show a few charts.

Firstly, let us look at the British 10-year bond yields:

As the chart shows, despite the incoming "catastrophe", investors are vey busy buying gilts.

Now, the exchange rate between the British Pound and two major currencies, the US dollar and the Euro (especially the Euro):


Well, most recently the Sterling has weakened against the Euro but in the long-term the British currency is in its upward trend against the European currency. 

Last but not least, a few days ago the British Pound weakened strongly against gold. Maybe this is an indication that financial markets fear about the Brexit?  

Well, I do not think so. The same pattern we may spot at the chart below. The Euro is also weakening against gold:

Summarizing - for the time being I can see no spectacular signs of an incoming tragedy. Brexit? What Brexit?

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