{"id":39166,"date":"2016-06-27T09:15:58","date_gmt":"2016-06-27T13:15:58","guid":{"rendered":"http:\/\/www.ino.com\/blog\/?p=39166"},"modified":"2016-06-27T09:15:58","modified_gmt":"2016-06-27T13:15:58","slug":"brexit-the-pound-will-survive-the-euro-will-not","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2016\/06\/brexit-the-pound-will-survive-the-euro-will-not\/","title":{"rendered":"Brexit: The Pound Will Survive, The Euro Will Not"},"content":{"rendered":"<p style=\"margin: 0 0;\"><img loading=\"lazy\" decoding=\"async\" src=\"\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/LiorAlkalay_Contributor_ImageBadge350.png\" alt=\"Lior Alkalay - INO.com Contributor - Forex\" width=\"350\" height=\"131\" class=\"alignleft size-full wp-image-30498\" style=\"padding-top: 10px;\" srcset=\"https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/LiorAlkalay_Contributor_ImageBadge350.png 350w, https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/LiorAlkalay_Contributor_ImageBadge350-300x112.png 300w, https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2014\/12\/LiorAlkalay_Contributor_ImageBadge350-270x100.png 270w\" sizes=\"(max-width: 350px) 100vw, 350px\" \/><\/p>\n<p style=\"margin: 0 0;\"><br style=\"clear:both;\"><\/p>\n<p>Friday, June 24th will be remembered as a Black Day for the British Pound. On that day, investors, shocked by the \u201cleave\u201d vote for Brexit, pushed the Pound off a cliff, toward its worst daily loss since 1985. And yet, despite the Pound being at the eye of the storm after the Brexit vote, it\u2019s not the Pound\u2019s future that investors should fear.<\/p>\n<h2 style=\"color: #003380; font-size: 17px;\">Brexit Impact On The Pound Sterling<\/h2>\n<p>The impact Brexit will have on the Pound should be divided into two ranges\u2014short to mid-term and long-term. <\/p>\n<p>In the short to mid-term, it\u2019s undeniable that the Pound will face significant and broad pressures\u2014monetarily, fiscally and economically. The Bank of England will likely need to deploy extra liquidity measures to assure stability in the financial system which, effectively, is monetary easing. From a political standpoint, uncertainty has increased dramatically. On Friday, the UK Prime Minister, David Cameron, resigned, and his \u201cheir apparent\u201d is still unclear. But even more, troubling is the future of Scotland within the United Kingdom. The Scots will be compelled to cast another vote, this time on their willingness to leave the United Kingdom and stay with the European Union.<!--more--> <\/p>\n<p>Of course, from an economic standpoint, uncertainty will transform into lowered confidence. The UK real estate market, which is dominated by foreign investors, will be under pressure. Moreover, consumer spending is likely to drop quickly. Adding it all up, it\u2019s undoubtedly negative for the Pound and will weigh on the currency for a while. <\/p>\n<p>Over the long term, however, the picture seems much brighter. Once the shockwaves fade, the tide for the Pound should turn favorable. As the EU is likely to continue to remain unstable, the Pound Sterling will become less and less exposed to the EU. In time, it could, in fact, turn into a safe haven currency. Inflation is likely to be higher and will warrant a tighter monetary policy from the Bank of England. As far as trade goes, the business community is likely to push hard for \u201cbusiness as usual,\u201d which will allow the UK to keep trading with the EU in large volumes. The difference is that now, UK businesses will have no EU \u201cred tape\u201d hurdling them. All of that will allow the Pound to eventually recover, although that recovery might come slowly and only after plenty of choppiness. <\/p>\n<h2 style=\"color: #003380; font-size: 17px;\">Euro\u2019s Future At Risk<\/h2>\n<p>Although the Euro took a much shallower plunge than the Pound initially, over the long run the Euro has likely already received its \u201cknockout blow.\u201d The departure of the United Kingdom from the European Union is a clear signal that the Euro is reversible. Although there is a distinction between European Union members and Eurozone members that are all denominated in Euros, it\u2019s hard to see one surviving without the other. If the European Union could unwind, so can the Eurozone, and if the Eurozone can unwind then the Euro can unwind, too. Risk premiums across European bond markets and money markets will have to move higher and higher, and integration across the EU will weaken. Stake it up with a rigid regulatory environment and weak economic performance and the incentive for other EU members to leave will grow with time, and there is nothing that the European Central Bank can do to stop that. It might not happen today or tomorrow or even this year, but every crisis will incentivize one member or another to contemplate leaving. And under such circumstances, it is hard to see how the Euro\u2019s long term path will be anything but south. <\/p>\n<p>Look for my post next week.<\/p>\n<p>Best,<br \/>\n<a href=\"http:\/\/www.ino.com\/blog\/meet-lior-alkalay\/\" target=\"_blank\">Lior Alkalay<\/a><br \/>\nINO.com Contributor - Forex<\/p>\n<p><span style=\"font-size: 12px; font-style: italic;\">Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.<\/span><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Friday, June 24th will be remembered as a Black Day for the British Pound. On that day, investors, shocked by the \u201cleave\u201d vote for Brexit, pushed the Pound off a cliff, toward its worst daily loss since 1985. And yet, despite the Pound being at the eye of the storm after the Brexit vote, it\u2019s [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":20,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[8319,6829,2003,8329,7009,6926,8074],"class_list":["post-39166","post","type-post","status-publish","format-standard","hentry","category-general","tag-brexit","tag-british-pound-gbp","tag-euro-eur","tag-european-union-eu","tag-eurozone","tag-lior-alkalay","tag-the-bank-of-england-boe"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Brexit: The Pound Will Survive, The Euro Will Not - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2016\/06\/brexit-the-pound-will-survive-the-euro-will-not\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Brexit: The Pound Will Survive, The Euro Will Not - INO.com Trader&#039;s Blog\" \/>\n<meta property=\"og:description\" content=\"Friday, June 24th will be remembered as a Black Day for the British Pound. On that day, investors, shocked by the \u201cleave\u201d vote for Brexit, pushed the Pound off a cliff, toward its worst daily loss since 1985. 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