NO DEAL Brexit = $$$ ??

Royalk

Royalk

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Okay guys, have to get this off my chest and hear some opinions.
I have started loosing sleep over the EUROGBP Forex market.
How many multi-billion dollar companies have their European hub HQ set in England? A lot.
A simple Press Release from a political member in the UK regarding details about Brexit, or simply mentioning the words “No Deal Brexit” has seen the EUROGBP market to go up anywhere from 0.10-1%. People are buying Euros.

If a NO DEAL Brexit comes into place, all these multi-billion dollars companies would have to relocate to somewhere else in Europe for their European hub. And no, staying in NO DEAL Brexit is 100% not an option for them, and doing so will result in them loosing hundreds of millions, so, they WILL relocate.

What will these companies do with their hundreds of millions of Pounds (£) when the No Deal Brexit comes? Buy Euros.
A shit ton of euros that is.
In the first minutes, if not hours, millions of euros would of have been bought. The market for the day will close with billions of euros bought.
In that absolute economic chaos , where everyone, their mothers and their dogs are buying euros, off rational thinking, fear , or impulse , EURO will Skyrocket against the pound. The Pound will massively de-appreciate towards the Euro.
This can see a massive BOOM for the EUROGBP market.

I live in Ireland so we use euros. What am I doing right now using my Euros? Well, I’m buying euros.
Euros are almost impossible to deappreciate against the Pound even if a Deal Brexit comes through.

The way I see it , it’s an almost risk-free investment that can possibly make a lot of money.
A shit ton of money that is.

looking forward to your opinions !
 
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I'll bite and chime in here lol. Ive picked up your main two points i think

1. Exchange rate fluctuation
2. Businesses with UK offices / operations moving elsewhere

1. By definition, an exchange rate is the value of a currency based on future value/buying power. So, the rate you see today is what the experts think will happen in the future. FYI when Germany joined the EURO in 19 blah blah they devalued their buying power by around 20% overnight. Anybody with any sense would see this would happen. Now, moving on to volatility, traders love this, it gives them ample opportunities for intra-day trading. You see YT trader etc "How to make $500 a day" they love volatility because it gives them good returns in short periods. The UK is the home for Financial Services, it is their main industry and so this situation suits the big players who of course have connections or ears to government officials.

2. People see-saw with the business issue. But lets think about the facts here, the EU is a trade-free zone, once the UK is out imports incur duty and exports include VAT. Long story short, everything costs ~ 20% more. Now obviously, business with smaller margins cannot absorb this expense increase so they will probably leave. The ones that can, will probably do what every big corp does, pass the increase on to the consumer.

In summary, GBP will continue to fluctuate or if we leave drop in value leaving average Brits poorer and struggling. There will be social outcry, perhaps even some good old fashioned anarchy. IMO based on the rules, the UK wont leave the EU ( and had no intention to do so) or if by miracle they do, you can be rest assured we will be using our Irish friends as a back channel for goods and have the best of both worlds.
 
joeybb said:
I'll bite and chime in here lol. Ive picked up your main two points i think

1. Exchange rate fluctuation
2. Businesses with UK offices / operations moving elsewhere

1. By definition, an exchange rate is the value of a currency based on future value/buying power. So, the rate you see today is what the experts think will happen in the future. FYI when Germany joined the EURO in 19 blah blah they devalued their buying power by around 20% overnight. Anybody with any sense would see this would happen. Now, moving on to volatility, traders love this, it gives them ample opportunities for intra-day trading. You see YT trader etc "How to make $500 a day" they love volatility because it gives them good returns in short periods. The UK is the home for Financial Services, it is their main industry and so this situation suits the big players who of course have connections or ears to government officials.

2. People see-saw with the business issue. But lets think about the facts here, the EU is a trade-free zone, once the UK is out imports incur duty and exports include VAT. Long story short, everything costs ~ 20% more. Now obviously, business with smaller margins cannot absorb this expense increase so they will probably leave. The ones that can, will probably do what every big corp does, pass the increase on to the consumer.

In summary, GBP will continue to fluctuate or if we leave drop in value leaving average Brits poorer and struggling. There will be social outcry, perhaps even some good old fashioned anarchy. IMO based on the rules, the UK wont leave the EU ( and had no intention to do so) or if by miracle they do, you can be rest assured we will be using our Irish friends as a back channel for goods and have the best of both worlds.
Click to expand...

A NO Deal Brexit has the UK definitely leaving the EU. And you’re missing the point , is not all about the increase in price over import and export.
It’s about every single multi billion dollar company HAVING TO MOVE elsewhere in Europe.
there is no if.
Any Financial US power or elsewhere, using UK as an European hub, WILL MOVE.
They will use all their assets to buy EUROS. EVERYONE would buy euros.
And the British Pound will loose value.
Think about the Swiss franc.
Remember when the Swiss Franc >>> Euro by a big margin?
Euro is now > Swiss Franc.
This will happen with the pounds if a No deal comes through.
 
"
Euros are almost impossible to deappreciate against the Pound even if a Deal Brexit comes through.

The way I see it , it’s an almost risk-free investment that can possibly make a lot of money."

That's exactly what the banks want to hear people saying. Banks don't care which way it goes as long as the market makers drive it the way they want. If the Euro gets too hot then the ECB will raise rates. If the pound slumps the BOE will cut rates. There is not a no deal. There is just a fall back to WTO which hurts both sides. All the big players are already in the game both ways so they are covered. All they want to to is take the money from the non professionals. A few years ago I was selling property in Spain and people were getting over 1.5 euros to the £ and nobody ever thought it would come down and investing in Spain was seen as risk free. Now we know how that turned out.
 
Breathe mate, doubt the brexit will be the new Leman Brothers.

GBP will depreciate a lot against EURO, that is for sure, but in the end prices are gonna be the same. As someone has mentioned above, customers (as usual) will be the ones suffering it, If something costs now 1,5€ in the future will be 1,8€.

This is no new story, there's always been currencies that are stronger than others. UK in summary, has always been a very expensive region if you compare it to other countries in Europe, due to their strong currency among other factors. And I believe it will still be the same to some point.

Now if you are talking about speculation in the market. Yes, probably if you bought euros long ago and sell them after the Brexit you will probably make good profit, same can apply to the EURO/USD or any other currency. Key is nobody really knows when things are gonna go down.
 
No deal GBP/USD goes to 1.15, buy it all and in 5 years back to 1.45.
 
@Royalk You say these companies will HAVE TO / WILL MOVE, why is this?

I agree the GBP will lose value, thats sense. But it wont be forever, we are talking instant loss for a year or two. And perhaps, minor loss for 5-10 years.

I cannot go with your analogy of CHF is like the EUR in this scenario. The Swiss are financial experts, they are a high caliber/quality nation. They stick to what they know.

The EU is ~ 28 countries, of which ~ 70% are a joke/dead wood. The powerhouses are UK, Germany,France along with Italy Spain.

Germany - Going down the toilet
France - Theyre French ffs enough said
Italy - C'mon really? Berlusconi was president
Spain - Has been fcked for years

Who's bringing credibility to the EU? Serbia? Poland? How about good ol' Greece?
 
As long as UK has it's own currency it will outperform the eurozone, literally nothing bad will happen.
 
ChesterF said:
No deal GBP/USD goes to 1.15, buy it all and in 5 years back to 1.45.
Click to expand...

I like this, this is more realistic with the US economy on the ropes and a potential US/UK trade deal.
 
Royalk said:
A NO Deal Brexit has the UK definitely leaving the EU. And you’re missing the point , is not all about the increase in price over import and export.
It’s about every single multi billion dollar company HAVING TO MOVE elsewhere in Europe.
there is no if.
Any Financial US power or elsewhere, using UK as an European hub, WILL MOVE.
They will use all their assets to buy EUROS. EVERYONE would buy euros.
And the British Pound will loose value.
Think about the Swiss franc.
Remember when the Swiss Franc >>> Euro by a big margin?
Euro is now > Swiss Franc.
This will happen with the pounds if a No deal comes through.
Click to expand...
You should not worry too much about "multi billion dollar company", they got ireland not so far, regarding the economic side, the average joe will suffer like it always have.
This whole brexit leave thing should be over, it's already annoying.
 
nSnoopy said:
You should not worry too much about "multi billion dollar company", they got ireland not so far, regarding the economic side, the average joe will suffer like it always have.
This whole brexit leave thing should be over, it's already annoying.
Click to expand...

Exactly they got Ireland not too far. What do they have to do to go to Ireland? Sell the pounds, buy the euros !
 
End of the day, we should be more concerned with the average joe being affected not billion dollar companies. The sad part is, the entire Brexit campaign was based on lies. The UK can achieve its "Brexit" goals without leaving the EU.

And, all this fear mongering about currency depreciation is pretty much resolved with forward contracts and currency arbitrage.
 
Royalk said:
Exactly they got Ireland not too far. What do they have to do to go to Ireland? Sell the pounds, buy the euros !
Click to expand...

Hey Mr Irish company i want to do business with you, maybe 1-5M a year but i cant pay in euros, would you accept USD or any other currency?

What do you think they will say? Money talks my friend.
 
joeybb said:
Hey Mr Irish company i want to do business with you, maybe 1-5M a year but i cant pay in euros, would you accept USD or any other currency?

What do you think they will say? Money talks my friend.
Click to expand...

mate you’re delusional. If you are say : PayPal. And want to open an office in France. How are you opening your office in USD? You CAN’T. You’ll have to take your usd and change it into euros.
 
Royalk said:
mate you’re delusional. If you are say : PayPal. And want to open an office in France. How are you opening your office in USD? You CAN’T. You’ll have to take your usd and change it into euros.
Click to expand...

I guess we will have to agree to disagree.

If you go to your bank with dollars will they accept them?
If you go to oxford street with 10K in euros, you think Gucci will turn you away?

These financial challenges you speak of do not affect big business. This is a fact. Next you'll be telling me prime real estate in London will crash in price
 
Code: 
https://en.wikipedia.org/wiki/Black_Wednesday

Pound will go up or down. Nobody knows. Either way, someone will bank hard. I remember what happened with Yen, back in 2011. I made lots of cash.
 
Are those of you in this play buying/selling puts and calls, buying the actual commodity or just stacking piles of cash in an extra room?
 
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