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- Justin Urquhart Ste­wart Justin Urquhart Ste­wart co-founded fund man­ager 7IM and is chair­man of in­vest­ment plat­form Re­gion­ally. Business · Brexit · Currencies · UK News · British Politics · European Politics · Politics · Foreign Exchange Market · Financial Markets · Finance · Stocks & Markets · Nigeria · Europe Stock Markets · FTSE 100 · Europe-Middle East Stock Markets · Diageo


A nEW us pres­i­dent, new vac­cines and new mar­ket highs – but we have one other is­sue in the uK to con­cern us.

Brexit – deal or no Deal. i am ig­nor­ing all the tire­some pol­i­tics and just look­ing at the eco­nomic im­pact in ei­ther case and its in­vest­ment ef­fects.


FiRsT, Brexit will af­fect the value of the econ­omy.

How­ever, the dif­fer­ence in the type of deal agreed – or in fact no Deal at all – will have strong ram­i­fi­ca­tions.

if ei­ther party de­cides to have a tod­dler tantrum and throw their toys out of their re­spec­tive euro-prams, there will be some se­ri­ous con­se­quences. This will ini­tially af­fect con­fi­dence in the strength and de­vel­op­ment of the econ­omy, and con­se­quen­tially the value of the pound against both the euro and the dol­lar.

Although it would be seen as neg­a­tive for the uK do­mes­ti­cally, many of the FTsE 100 com­pa­nies have very sig­nif­i­cant over­seas earn­ings, and as we have seen be­fore, a weak­en­ing pound can push up the value of the in­dex, per­verse though that may seem.

How­ever, let’s also think about what could hap­pen if our tod­dlers find them­selves coo­ing in sweet agreement (in what­ever lan­guage). The ini­tial ef­fect would be to im­prove the con­fi­dence. in this case we could very likely see the pound rise against those lead­ing cur­ren­cies from where it is now (around $1.33) up to $1.40.

To give you some per­spec­tive, it was around $1.50 at the time of the Euro­pean union ref­er­en­dum.

As the pound would rise, then those same FTsE 100 over­seas earn­ers would be hit, but the rather more do­mes­ti­cally-fo­cused uK in­dex, the FTsE 250, could go up as in­vestors see greater eco­nomic op­por­tu­nity for those com­pa­nies.

Ac­tu­ally, rather than nec­es­sar­ily in­spir­ing en­thu­si­asm, i sus­pect i t would be as much a rally caused by re­lief rather than any­thing else.


HERE is one of those mo­ments of per­sonal choice. if you think that we are not go­ing to see a deal, you could buy one of the FTsE 100 over­seas earn­ers and see how the fall­ing pound can in­crease those prices.

How­ever, per­haps you are more of an op­ti­mist, as i am, in which case some in­vest­ment in do­mes­tic com­pa­nies would be more ap­pro­pri­ate. if we get a Brexit deal, you will very likely hear a col­lec­tive sigh of re­lief from many in­dus­tries in­cludi ng car man­u­fac­tur­ers and f i nan­cial ser­vices, for ex­am­ple.


iF you think there will be a Brexit deal then you could buy an ishares or Van­guard FTsE 250 ETF, a f und which tracks the in­dex.

if, how­ever, it’s a no Deal for you, then a FTsE 100 ETF would give a broader ex­po­sure. or for a sin­gle com­pany – think about the spirit maker Di­a­geo – at least you could drown your sor­rows.

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