Impact of Brexit on UK Equity and Currency Market

Running head: INTRODUCTION TO FINANCIAL MARKETS
Introduction to Financial Markets
Raja Tayab Hussain
University of Westminster
Authors Note:

INTRODUCTION TO FINANCIAL MARKETS
1
Introduction:
The main highlight of the essay is to identify the impact of Brexit on the performance
of the UK equity and foreign currency market. In addition, the time period between 23rd June
2016 to the end of December 2017, which help in determining the performance of the equity
and currency market of the UK. The FTSE 100 index is used for analysing the performance
of the UK economy after the decisions of Brexit. On the other hand, the GBP/USD value has
been taken into consideration for determining the fluctuations that incurred after the Brexit.
Performing correlation analysis, while comparing and analysing the two mentioned
trends:
5,500.00
6,000.00
6,500.00
7,000.00
7,500.00
8,000.00
FTSE 100
The above graph provides adequate information regarding the performance of UK
Equity market and currency market for the tenure is from 23rd June 2016 to the end of
December 2017. The analysis has directly indicated that the performance of the equity market
has increased in value, as detected in the above figure. The values have increased from the
level of 5,982.20 to a high of 7,687.77, which provides a positive indication of the future
growth of the UK equity market. The above figure has directly indicated that the relevant

INTRODUCTION TO FINANCIAL MARKETS
2
increment in values of FTSE 100 has been witnessed after the declaration of the Brexit by the
UK government. Hobolt (2016) mentioned that investors using the share price trend is able to
understand whether the capital market is in an up or down trend, which eventually helps them
to make adequate investment decisions.
22-Jun-16
12-Jul-16
1-Aug-16
21-Aug-16
10-Sep-16
30-Sep-16
20-Oct-16
9-Nov-16
29-Nov-16
19-Dec-16
8-Jan-17
28-Jan-17
17-Feb-17
9-Mar-17
29-Mar-17
18-Apr-17
8-May-17
28-May-17
17-Jun-17
7-Jul-17
27-Jul-17
16-Aug-17
5-Sep-17
25-Sep-17
15-Oct-17
4-Nov-17
24-Nov-17
14-Dec-17
1.1
1.15
1.2
1.25
1.3
1.35
1.4
1.45
1.5
GBP/USD
The analysis of the exchange rate of GBP against USD has directly indicates the
devaluation of the currency, which has taken palace during the tenure. In addition, the
evaluation of currency pattern has indicated that the values of GBP/USD have mainly
declined during the period, which indicates that USD has strengthened against GBP. This
also indicates that GBP valuation has deteriorated after the announcement of Brexit by the
United Kingdom. The above figure also states that after 2017 the overall increment in GBP
value against USD has been rising, which indicates that the current trend of the GBP value
has been presenting positive attributes. The sudden decline in GBP values was seen during
the period of the announcement. However, from 2017 the value of GBP started to increase,
which is directly indicating an increment in the currency value against USD (Becker, Fetzer
and Novy 2017).