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Brexit Referendum - A Brief Overview

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Brexit Referendum - A Brief Overview


The European Union (EU) is made up of twenty-eight European countries, nineteen of which use the EUR as their currency. Great Britain, as we know, uses their own - GBP. Great Britain would be the first nation state to leave the EU. Greenland, which is a part of Denmark, voted to leave the EU’s predecessor, the European Economic Community, and kept their own currency - DKK.


The evolution of the Brexit referendum has nearly come to conclusion and the economic impacts may be immense. However, the vote was conceptualized by Britons with little concern about the economy. Those arguing for “Leave” the EU are not concerned so much about the pound, but fear other major political issues such as immigration. They feel British sovereignty is threatened by the fact that unelected officials in Brussels have control over major political issues like the quota of migrants entering the UK.


Many important economic issues will be unresolved no matter the outcome of the Brexit vote. Great Britain may or may not keep the pound if they stay in the Union, although chances that they would convert to the EUR are slim. The EU is Great Britain’s most important trade partner, almost half of all GB exports and imports. Negotiations of new trade deals would take years.  If Great Britain chooses to leave the EU, London would lose a lot of its financial relevance and so would the British pound.


Should the “Leave” supporters have their way, the biggest impact of the Brexit would be in the Forex market in the EUR/GBP and GBP/USD; already, the pound is under pressure due to uncertainty around the Brexit.

 

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