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BrExit or No BrExit ! Fate of Currencies & Gold

June 12, 2016

As we get closer to June 23 no one can tell about BrExit Yes or No. Neither Politicians nor Predictor can provide straight answers as both will talk in favor of their own interest.

UK market is heading for uncertain period with many risks attached. Political and Foreign Policy Risk factor adds to country’s National Security Risk.

It will make Rest of Europe uncomfortable if UK decided to exit. Ireland could be clobbered as UK is its largest trading partner. Scotland too will melt because of its dependency and close trading relationship with UK.

Europe may be faced with contagion effect because exit will increase risk of Referendum Trend in EU Countries that could weaken Euro-zone. And more likely, BrExit will certainly add to the woes of respective governments of Germany and France in 2017 election.

The tug of war is between UK’s Business Community and those that believe that the pride of British people is at stake, as they consider themselves more Englishmen than European.

Business Community believes that EU membership helps in reducing trade barriers, as it allows Free Trade. It also allows free movement of its Capital and Labor.

While, exit supporters strongly believe that by joining of European Union they are not independent in making decisions as they will have o abide the EU Rules and Regulations.

The campaign led by David Cameroon has strong support from UK’s Business community backed by US President Obama. Whereas London’s former Mayor Boris Johnson leading BrExit Campaign is supported by the UK’s Anti-Immigration Independence Party.

UK’s “The Sun” reported that even Queen Elizabeth II backs BrExit, which was quickly denied by Buckingham Place.

However, there are many risks and factors attached to this debate, as disagreement is on immigration policy. They think probably allocation of agriculture quotas will put its farmers in disadvantageous position. Joining the Union of 5-Other Nation that includes Turkey risking control borders. Many Britain’s hates the idea of being controlled and regulated by the European bureaucrats.

If Britain decides to exit then Europe cannot escape from disaster, as other could soon follow and Scottish National Party may take the lead and could ask for another referendum on Union with UK that could increase risk of Scottish Independence. Similarly, North & Southern Ireland problems could pop up specially issues relating to trade.


GBP 1.4255 = Market would continue to wobble and witness choppy trading sessions until June 23. Euro too against US Dollar will come under pressure, but may regain some strength against Pond Sterling.

Swiss Franc will enjoy strength in crosses against both the currencies. Japanese Yen will the other currency to enjoy European unrest. Gold will find buyers on dip that could comfortable surpass $ 1300 and may get close to $ 1350 levels.

Pound, will continue to find regular sellers.

If you have followed my May 01, 2016 note and took Profit or Sold Sterling, as the currency was well capped below 1.4820, I would still recommend to wait to buy, as more losses is expected, as I am still not sure that how Bank of England will provide Cable the safety net, though there is one more BOE meeting due a week before the Vote. Banks are already told to prepare their contingency plan, which means possibly more trouble for the British currency.

However, I would suggest taking early profit or closing instead of opting for a bigger gamble. As “Yes” Vote will reverse the trend. Next level to watch is beak of 1.4140 and 1.3740 or 1.3220. While 1.4850 will be the key level to watch on the upside.



(Disclaimer applies in my post, which means that the perspective is my personal view. I have made every effort to ensure accuracy of information provided. However, accuracy cannot be guaranteed. This article is strictly for information and not intended for Trade or Business Transaction)




  1. We now know. Brexit. So gold is going up already.

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