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You are here: Home / British Sterling / Will a Brexit cause a domino effect within the EU?

Will a Brexit cause a domino effect within the EU?

June 29, 2016 by Rob Lloyd

Will a Brexit cause a domino effect within the EU?

brexit domino effectThe UK’s vote to leave the EU last Friday signals concerns about the maintenance of the EU, and it would be unreasonable for the EU to ignore the outcome of the vote. As it currently stands, they are anxious for the UK to trigger article 50 at the wishes of the British public.

As of yet, there appears to be very little reflection on the vote, Angela Merkel, amongst other key EU figures, refuse to have talks with the UK until article 50 is triggered. A stressful time for all I can imagine, but this isn’t the time for formalities and rigidity, the remaining EU members need to question what has gone wrong.

In the case for the UK, the British public spoke out against immigration, EU laws dictating how they fished their waters or farmed their produce, the British public are under the belief that their country is in the hands of unelected bureaucrats.

Whether you agree or disagree, the UK majority hold these views, it is now up to the EU to handle the outcome.

The response so far has been less than appealing, Angela Merkel originally took a soft approach to the results, prompting a smooth, calm period of negotiations. But even she takes the view, like others within the EU state, that the UK should just go, any attempts to halt the process could be damaging for the Eurozone.

But this ‘like it or lump it’ attitude only gives the view that they’re not concerned with the opinions of the public, which is further indicative of an economy that’s not interested in those that fuel it.

The Brexit domino effect

With the rise of right wing parties often brings with it an agenda to cut ties with the EU, Marine Le Pen, the leader of the French political movement ‘The national front’ is pushing her Frexit agenda which will likely be on the table at the next election.
The same can be said for the Netherlands, Sweden, Italy, Poland, Belgium, Hungary and Germany.

Given that the UK is the 3rd largest net contributor to the EU, will Germany and France pick up the financial pieces?

How will this impact your currency requirements?

With all the attention on Sterling and its massive decline in value, we must not overlook the knock on effect this may have on the Eurozone. If the EU is unable to address the public’s concerns further Referendums will likely result, leading to further division and potentially the collapse of the EU.

If you’re looking to sell Euros for Sterling, enjoy the current levels but be mindful that the Euro is just as vulnerable as the Pound, there’s no guarantee that these rates will be around for long.

If you’re a Euro buyer, rates have crept up to 1.21 which sits just below the 10-year average, with so much uncertainty ahead, the currency pair will be under a lot of stress for the foreseeable so make the most of current levels.

Filed Under: British Sterling Tagged With: Brexit, EU Referendum, GBPEUR, Pound Sterling weakness

The information on this website is provided for information purposes only. It does not constitute advice to any person on any matter. Every reasonable effort is made to ensure that the information is accurate and complete but we assume no responsibility for and offer no warranty with regard to the same.

About Rob Lloyd

Robert brings with him a wealth of knowledge on what is impacting exchange rates, especially around the subject of the EU Referendum and the implications for Sterling and Euro exchange rates.

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