Tuesday 17th January saw some clarity brought to the UK’s negotiating position and with it, some much needed relief for Sterling.
Although part of this strength could be attributed to the PM’s confirmation that any deal would be subject to a Parliamentary vote, it has raised the expectation in some quarters that Brexit is not a done deal.
We disagree: Brexit means Brexit.
Currencies and markets will continue to be hostage to news flow on negotiations, but don’t underestimate the impact of Trump’s apathy towards Europe and NATO – the EU needs allies and not adversaries and with the UK now at the front of the queue for a trade deal with the US, Mrs May’s negotiating hand has considerably strengthened.
This is positive for Sterling denominated assets and marked-down UK domestic stocks, which should see some relative strength given the elevated risk premium that the group is carrying.
The key thing for any long term investor here is to remember the pitfalls of herd mentality in the wake of deafening media noise. Remember that opportunities often emerge by cutting through the din and finding a genuine inflection point in generally accepted views.
As a business, we deeply believe in the continued provision of advice and its value, and anyone seeking it should ensure they are provided with insight into the impact of short term events such as our exit from the EU on one’s long term strategy. If you would like to discuss the impact of Theresa May’s 12 point Brexit plan further, please contact your Investment Manager.
Alternatively, if you are new to Killik & Co, please do contact us on firstname.lastname@example.org.