Learn how you could profit from the market volatility surrounding Brexit – and hedge your share portfolio and exposure to sterling – with the world's No. 1 provider.1
Are you Brexit-ready?
Are you Brexit-ready?
Download our Brexit trading tips, explaining how to:
Why trade Brexit with IG?
Free risk protection
Our guaranteed stops only incur a fee when triggered2
How can you profit from Brexit?
You can profit from Brexit by trading financial markets such as shares, forex pairs and indices. Many of these assets are highly sensitive to the outcome of negotiations, with the FTSE 100, UK stocks, GBP/USD and gold all particularly likely to experience significant moves.
CFDs enable you to profit from markets that are falling as well as rising, giving you plenty of opportunity to capitalise on volatility without ever having to take ownership of the underlying asset.
Read on to discover more tips on how to trade Brexit.
How will Brexit affect GBP?
How Brexit will affect GBP depends on the state of negotiations up to and including the new departure deadline of 31 January 2020. More pressing for the pound, is the upcoming UK general election which is set for 12 December. Brexit will no doubt be a talking point, and sterling will likely react to any opinion poll predictions about the outcome.
Regardless of which party wins, we’re sure to see increased volatility in the pound leading up to and after the election. For example, if the winning party’s manifesto champions a no-deal Brexit, sterling will probably weaken against the dollar and the euro. However, if the winning party is committed to securing a deal, or even wants to revoke article 50, sterling will be expected to strengthen. With that in mind, here are our analysts’ predictions for GBP/USD in the event of the three main Brexit outcomes:
|Date(s)||No-deal Brexit||EU and parliament approve deal||No Brexit|
The pound is likely to move between these levels as the probability of each outcome changes. For that reason, it is recommended that traders keep an eye on the key Brexit events outlined in our timeline below. IG is the only provider to weekend trading on this key pair, meaning you can be ready to act whenever Brexit-related news breaks.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quartely summary.
|1 November||New EU leaders take charge|
|1 - 30 November||Potential special summit of the EU27 between these dates|
|7 November||Bank of England rate decision|
|12 December||UK general election|
|31 January||UK to leave the EU at 11pm (UK time) unless extension granted|
How do I hedge Brexit risk?
You can hedge your Brexit risk by opening positions that will turn a profit if the assets you own start to lose money. With IG, you can hedge against:
We’re the only provider to offer GBP/USD and the FTSE 100 on the weekend, so you can offset your risk whenever volatility arises.
Share portfolio risk
We enable you to go short on major indices and over 12,000 shares, so you can protect your entire portfolio from downside risk.
We offer forex pairs including GBP/USD, EUR/GBP and GBP/EUR, enabling you to insulate yourself from currency risk.
Use our platform tools to stay ahead
Take control with free guaranteed stops, which only incur a fee when triggered.3
Set alerts with the only provider to offer percentage and point-based monitoring.
Stay ahead of volatility with indicators including average true range and Bollinger bands.
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Markets to watch during Brexit
The table below shows live prices for some of the markets which have been, and which could be, most affected by Brexit. Read on to find out more about each of these.
How will Brexit affect the FTSE 100, UK shares and gold?
How will Brexit affect the UK stock market?
The impact of Brexit on the UK stock market largely depends on whether Britain leaves with or without a deal. A deal is intended to limit the economic impacts of leaving the EU, as a no-deal departure is widely feared to send economic shockwaves through the British and European economies.
Whatever the outcome, volatility will very likely remain for some time. Both the FTSE 100 and FTSE 250 have continued to experience increased price movement since the 2016 referendum, due to widespread sell-offs and uncertainty on global equity markets. IG is the only CFD provider to offer weekend trading on the FTSE 100, which means you never have to miss an opportunity to profit.
Whether there is a hard or soft Brexit depends on the resolve of Boris Johnson versus the position of the EU, and any attempts by the UK parliament to block a no-deal departure. What is almost certain is that the no-deal scenario will cause even more market uncertainty than the last few years of negotiations.
However, market uncertainty is not necessarily something to be feared. Through CFDs , you can speculate on asset prices rising as well as falling – meaning that you could profit from a hard or soft Brexit outcome.
What share opportunities will Brexit bring?
The continued volatility surrounding Brexit provides plenty of opportunities for traders looking to go long or short. Here, we focus on some shares which might be good buying options for traders to consider, because they demonstrate the fundamentals required to weather the storm of the UK’s European departure.
Best shares to watch in a hard Brexit
A hard Brexit could increase the volatility of UK stocks, because of the uncertainty that it would cause to the British economy. The three companies we have chosen here have significant investments outside the UK, so they could show resilience and experience some growth in the event of a hard Brexit.
- Ferguson (FERG) - has considerable operations in the US as well as Canada, where it is known as Ferguson Enterprises and Wolseley respectively
- British American Tobacco (BATS) – has diverse secondary stock listings, aside from its primary listing on the London Stock Exchange
- British Petroleum (BP) – has operations in almost 80 countries around the world, which means that its revenue streams are not completely reliant on relations between the UK and EU
Best shares to watch in a soft Brexit
The list below includes some shares which could increase in value in a soft Brexit, because they are domestic UK shares with operations almost exclusively within the UK.
These shares have the most to gain from a soft Brexit, because leaving with a deal would cause the least damage to their interests. Some popular shares to watch in a soft Brexit might be:
- Persimmon (PSN) – one of the UK’s largest new home builders, with considerable operations across the UK
- Travis Perkins (TPK) – the UK’s largest builders’ merchants, supplying over 23,000 trade products and already a go-to for many UK building companies
- Lloyds Banking Group (LLOY) – has primary operations in England and Wales, so stands to gain from a smooth transition
Despite these shares being highlighted as ones to watch in a soft Brexit, you might also find that they rally on the news of a hard Brexit. This is because of the potential for new trade deals that will need to be done down the line.
Either way, these shares are very likely to experience some volatility in the aftermath of a final Brexit decision, so it’s worth watching their charts closely for opportunities to go long or short.
How will Brexit affect gold?
As ever in times of uncertainty, investors look to commodities such as gold to provide a haven. After experiencing a spike following the initial referendum in June 2016, gold’s price has largely settled over the last couple of years. That is not to say that it couldn’t spike again, especially given the uncertainty surrounding the next steps for the UK’s departure.
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Based on revenue excluding FX (published half yearly financial statements, June 2019). For forex, by number of primary relationships with FX traders (Investment Trends UK Leveraged Trading Report released July 2019)
2 A small premium is payable if a guaranteed stop is triggered.
3 Trading is available around the clock, apart from 10pm Friday to 4am Saturday and 20 mins just before the weekday market opens on Sunday night.