Why trade Brexit with IG?
Our guaranteed stops only incur a fee when triggered2
How can you trade from Brexit?
You can trade the volatility 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 take a position in 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.
If you prefer to buy stocks outright, you can do so with our share trading service. This enables you to profit from increasing share prices, as well as by receiving any dividend payments issued by the company.
How will Brexit affect GBP?
How Brexit affects GBP will depend on the events of the next few weeks. If it appears that the UK is heading towards a hard Brexit, it is likely that we would see the pound depreciate against other major currencies such as the dollar and euro.
Conversely, if it appears that the UK is likely to get a deal with the EU – or that Brexit could be delayed or cancelled entirely – the pound is likely to appreciate significantly against these other currencies.
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 Australian 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 Markets 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.
|September - October||Conservative, Labour, Lib Dem and Brexit party conferences|
|17 - 18 October||EU Council meeting|
|19 October||Prime minister has to ask the EU for an extension if Brexit terms not agreed|
|21-25 October||Parliament could vote on Brexit terms|
|31 October||UK scheduled to leave the EU at 11pm (UK time)|
|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|
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.
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 guaranteed stops, which only incur a fee when triggered2.
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.
Markets to watch during Brexit
How will Brexit affect other markets?
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 Australian CFD provider to offer weekend trading on the FTSE 100, which means you never have to miss an opportunity.
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 – and investors – 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.
Get the latest Brexit news
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1 Number 1 in Australia by primary relationships, CFDs, Investment Trends December 2018 Leveraged Trading Report
2 A small premium is payable if a guaranteed stop is triggered.
3Trading is available around the clock, apart from 5am Friday to 11am Saturday and 20 mins just before the weekday market opens on Sunday night.