Stocks

How Brexit Will Affect The FTSE 100

In its most simplest form, Brexit is the withdrawal of England from the European Union (EU).  The decision to leave the EU was very close, with just under 52% of voters opting for Brexit.  But I think the voters were voting with their emotions.  Under EU law, Britain could not prevent a citizen of another EU country from coming to live in the UK, resulting in a huge increase in immigration resulting in an increase in the cost of living and fewer jobs. Equally important to the people of UK was with an “open border policy,” the UK is also more susceptible to terrorist attacks.

From a business standpoint, the immediate benefit of leaving the UK would be UK would longer contribute to the EU budget or bail out countries drowning in debt.

Because the EU is structured like the United States, right now imports and exports between member states are exempt from tariffs and other barriers.  If Brexit occurs, this “free trade” privilege goes out the window.

Many economists think Brexit will hurt the UK’s economy longer term and reduce GDP.

London is the world’s capital for Forex and is one of the world’s biggest financial centers currently, but leaving the EU would tarnish this status symbol.   What we are witnessing is banks establishing new headquarters elsewhere, car makers are scaling back and/or canceling production and companies are selling off their UK assets.

The Brexit deadline extension expires on Oct 31st. The FTSE 100, is an index representing the UK’s largest 100 companies. So how will Brexit affect the UK?  Hopefully I already answered the question, but when one connects the dots, the logical conclusion is the FTSE 100 will collapse (along with the British Pound).

As I write, price on the FTSE 100 is at a critical major support/resistance line.  If the 7300 level holds, the chart suggest price is heading down to the monthly demand at 6650.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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2 comments

@peepso_user_18(Bit Brain)
In the long-term it will be interesting to see what new trading partnerships the UK might forge, possibly leaving it far stronger than before.
2 weeks ago
@peepso_user_19(Rolland Thomas)
the ongoing saga will continue has I hear things will get push off again until 2020.
2 weeks ago