Feeling fatigued from relentless Brexit headlines?

You’re reading this because you are interested in finding out how Brexit might present an opportunity for you to grow your portfolio.

No matter how big or little your financial connection is to the GBP, we are pretty sure that a no-deal Brexit could affect you. We’ve taken some time to outline some of the most important concepts in Brexit, and have distinguished fact from fiction.

1. Will a hard Brexit lead to a drop in the value of GBP?

“Hard Brexit” is an expression unofficially coined by the British media to describe what will happen if the UK leaves the EU without a withdrawal agreement in place. In this situation, the UK would leave the European Single Market with next to no trade deals, and EU agencies would stop providing their services to the UK entirely.

According to a recent BBC report, currently 79% of all food imported to UK supermarkets comes from the EU. If a hard Brexit was to be enforced, this could mean that the variety and quantity of non-British goods in shops could drastically fall.

We’ve charted the GBP against the dollar on major events to see its reaction.

  • 23rd June 2016: UK voted to leave the EU
    the chart shows a drastic drop in value
  • March 2017: UK notified the EU that they will leave
    significant market volatility shown on the chart
  • 24th July 2019: Boris Johnson takes over as PM:
    the chart shows, another, not insignificant, drop in value

Using historical price movements, we can see that there is a precedent for significant market volatility around Brexit news.

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2. Could my GBP be worthless if Britain exits the EU?

This is a concern that has been echoed by many of our clients who are concerned about their GBP portfolio. Whilst we are unable to predict the future, we do anticipate high levels of volatility surrounding Brexit news. We recommend that all traders of the GBP and of the EUR put sufficient stops in place to ensure that their investment is protected. Whilst significant gains can be made during periods of market volatility, so can significant losses.

Any Brexit-related trades can be protected by insuring them. Put simply, if the market moves against you, you can get your money back*. TIOmarkets offers this product, known as the TIOshield, to all VIP Black subscribers. Try out your own TIOshield trades risk-free using the TIOmarkets DEMO account.

3. Will all Brexit trading volatility be over by the end of October?

Britain’s new PM Boris Johnson has stated that the country will most certainly be leaving the EU, whether an exit agreement with the EU has been reached or not. In his words, they will leave “come what may”. Whilst an additional £2.1 billion has been allocated in the event of a hard Brexit, there are no guarantees of market volatility terminating by the end of October.

TIOmarkets Chief Dealer, David Hannigan, suggests that traders should be prepared for a long period of volatility.

Here are some suggestions for how traders can navigate ongoing volatility:

  • Put stops in place on your MT4 / MT5 platforms for every single trade placed
  • Be mindful of potential gaps in the market, especially over a weekend
  • Utilise trading insurance, so that you can get your money back on losing trades, and keep your profit on winning trades.*

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TIOshield WORKS

Whenever you open a trade you’ll have the option to add insurance. If your trade goes well, you keep your profit. And if it doesn’t go well, you can get your money back. All this at the cost of a small variable premium, which will be confirmed for you at the time of placing the trade.*

Trade on GBP volatility using TIOshield

TIOshield gives you your money back in case you lose your investment on a bad trade.
It’s free with the VIP Black subscription package.

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4. Should I be investing in safe havens during Brexit announcements?

Instruments such as Gold XAU have long been considered as safe havens. This is probably down to the fact that Gold is able to maintain its value, more or less, over time in a way that other major currencies have not been able to. As a result, it’s much less prone to sudden drops and peaks in volatility. We’ve taken a chart showing XAU over a nine-month period to demonstrate this.

Because of this, many traders have optioned to invest in Gold. According to some of the best risk managers, portfolio diversification is a useful way to help manage risk.

TIOmarkets offers some of the lowest spreads on the market and absolutely no commissions to VIP Black subscribers. Try testing our Gold trading environment and we guarantee you won’t find a cheaper Gold trade anywhere else. Look out for the currency pairs labelled XAUUSDz or XAUEURz for the cheapest trades.

5. Will Brexit not affect me in the event of a “soft Brexit”, or if Britain doesn’t leave the EU?

Brexit will affect many people in a multitude of ways both inside Britain, inside Europe, and beyond. At the very least, we have already shown that FX – the world’s largest market – is already being affected. With over 5.3 trillion USD being traded every day in FX, this is not an insignificant matter.

Whilst sentiment in the UK is becoming increasingly regretful at the prospect of losing various rights and services outside of the Eurozone, the PM is pushing forward for the country to leave as quickly as possible.

If you are trading one of the major currency pairs, we are certain that there is likely to be some kind of impact on your trading portfolio. Not only are GBP and EUR both likely to be affected, but also British and European Stock Markets such as UK100 and Germany30.

Choosing to trade with a regulated broker can help reduce the chances of your trade going wrong. Learn more about our trading insurance tool by visiting https://tiomarkets.com/reverse-your-bad-trades

Or why not sign up today and we’ll welcome you with a walkthrough of our platform.

Trade on GBP volatility using TIOshield

TIOshield gives you your money back in case you lose your investment on a bad trade.
It’s free with the VIP Black subscription package.

SIGN UP

Trading is risky