In a market analysis on how retail traders can navigate the EU referendum, Admiral Markets senior analyst Nenad Kerkez says that if Britain votes to remain in the European Union, it should adopt the Euro by 2020.
During the past week, many FX brokerages have detailed their risk management policy with regard to the forthcoming referendum on Britain’s membership of the European Union, the result of which may generate market volatility.
Many firms have taken the prudent measure of adjusting their margin rates, and in some cases, advising that traders refrain from executing spot currency trades during that particular period.
Today, Admiral Markets has taken a different route, providing a market forecast and some advice with regard to how retail traders could potentially navigate the referendum period and ‘trade the Brexit.’
Nenad Kerkez, Senior Market Analyst at Admiral Markets today explained to FinanceFeeds “I think that if Britain decides to stay in the EU, then it must adopt the Euro (and drop the GBP) by 2020.”
“I believe all countries in the EU must adopt Euro by 2020. That includes Croatia, Bulgaria and Romania. It’s an EU requirement that all countries are on the single currency by their plan date after all. Also, all legislation in the UK will need to be in alignment with the European Union codes / legislation, so it sounds like a re-write of UK legislation” – Nenad Kerkez, Admiral Markets
“On the flipside, if Brexit happens, UK keeps the GBP and legislation, but runs the risk of losing population (those with EU passports currently residing in the UK). UK asset prices may drop and there’s a risk that London may no longer be the financial hub of Europe. There could be a funding deficit too, as the UK would lose access to ECB project funds. IMO, UK should renegotiate the terms with EU” says Mr. Kerkez.
“If you ask me about the chances of Brexit happening – a couple of months ago I’d say 90-10 in favor of the UK voting for the EU. Now its like 50-50. We need to see what the undecided, will vote for” is his opinion.
With regard to which set of circumstances traders can bear in mind with regard to the forthcoming Brexit referendum, Mr. Kerkez pointed out five aspects:
Investing in risk-off currencies like long trades in the JPY if it aligns with your system; using Stop Losses; and setting realistic profit targets.\
Consider buying high grade Corporate or Sovereign Bonds, as these prices increase with more demand
Use lower leverage, as markets may be volatile and subject to whipsaws.
Investing in risk-off assets like Gold.
Consider investing in Bitcoin, as it’s also known to appreciate during risk-off – though bear in mind its limited currency life to date.
Just one week remains before the future of Britain’s membership of the European Union is known, therefore the anticipation and potential volatility as companies, government departments, shareholders and traders as well as the general public take measures to safeguard their position, whichever way the nation may decide.#admiral markets, #brexit, #euro, #market analysis