Brexit: the end of an era and the start of something new.
Today, Britain will make the monumental step of triggering Article 50. Today, the world looks on as history is made.
Prime minister Theresa May has signed the official letter invoking Britain’s departure from the European Union.
As one of the first to join the trading bloc, the United Kingdom are venturing into uncharted waters, as they unravel the roots that are bound to EU soil.
Nine months since Britons voted to leave the treading bloc, a flurry of gloomy premonitions ensued, painting a dim future for the UK post break-up. Once negotiations between these separating entities commence, a true picture of a sovereign UK will emerge.
Unsurprisingly, conflicting points of view have stemmed from both sides of the referendum; Brexiters say that the UK economy is growing, Remainers say UK assets have lagged behind their counterparts.
For the next two years, asset prices will correlate with the negotiation process. Inflation will also play a major part. As the pound weakens, there will be an upward pressure on UK inflation and thus, a tightening of monetary policy.
Two major topics need to be settled before the direction of asset prices can be assessed; the UK’s access to the single market and the freedom of labour through UK borders.
It is understood that key trade issues may remain unresolved by March 2019, the official end point of negotiations. Therefore, we expect a lot of uncertainty, which markets detest.
Sterling has taken the brunt so far, as negotiations commence this is likely to continue.
As Theresa May singed the document to leave the EU, sterling weakened to $1.25 against the dollar. The euro is trading at £0.86 against the pound.