No independence it is, and GBP traders are enjoying the big relief rally this morning and shorters have no choice but to cover their position in the light of all this. So, for now, we are out of woods, atleast for few years. It is London’s responsibility to deliver on its promises fast, and as agreed, because any kind of backing out could bring us back here once again. Most of the industry leaders in Scotland have praise the out come and now they will be happy enough to put the investments back on track and forget this event.
What we have avoided today for the UK is painful and ugly uncertainty. Uncertainty is the enemy of investment and kills the taste for any riskier assets and today’s vote has removed that uncertainty. There is strong possibility that we may start seeing the money coming back which left the UK equities. Moreover, the vote has also avoided the inflation which was going to take a bad hit if we had the Yes vote. At the same time real wage growth, which is on the mandate for the Bank of England would have taken a big assault, but the No vote has saved this and this is going to increase the pressure on Mark Carney. The focus will be back on the economic data and when the bank will increase the interest rate and odds remain in favour that the BOE will be the first major central bank to raise the interest rate.
Having said that, Bre Exit is something very interesting and it could have some serious impact for the United Kingdom. Let’s not forget that Scottish people want to stay in the EU and if UK does not want to stay in, it can bring the referendum question once again. Moreover, Mr Cameron has also announced that similar devolution power will also be given to Northern Ireland, Wales and England. So it is will be interesting to see their take on this Bre-Exit.
Back in the EU, the question which many are asking is that what this referendum will mean for Catalonia and will the outcome of his Scottish referendum will ease that. Perhaps, the format of devolution of powers in Scotland could also be replicated in Spain.
Disclosure & Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.
by Naeem Aslam