Brexit? No reason
A large debate has started ever since the meeting of the heads of the 29 EU states have signed the “British deal” last Friday. The pound dropped to a 7-year low after Boris Johnson’s statement that he will join the “Leave campaign”. However, if you actually look closer into what they have agreed upon, you’ll see that Britain will not leave the EU (the polls shown are always within a “margin of error”).
As usual, the main concern of the press, namely the benefits for European migrants, was not the main concern of the gathering of EU leaders, it was just something debated to be brought to the public. The amount they spend is insignificant if you look at it as a percentage of the British GDP.
Let’s now shift this article to what mattered most in the Thursday — Friday marathon meeting. The City of London will be exempt from EU laws and regulations, allowing it to be subject to British legislation only. Which is everything the major companies wanted, as well as the “small” hedge funds. Thus, having obtained this “victory”, the free labour movement and the trading openness to the rest of Europe, can only benefit any company.
Elections are won with money and, usually, referendums are not held without “knowing” the outcome in advance. Since it is in the best financial interest for all companies to stay within the EU (more people to choose from, easier to trade, no EU regulations), it is rather straightforward to see which side of the campaign the money will go.
The campaign will be interesting to follow, as there are British politicians who truly believe that UK is better off outside, but economical gain will prevail.
PS: Buy options on the Cable and wait till expiry, after the referendum. The market overreacted to the “Boris statement”.