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Brexit risk rising?

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According to bookmakers in the UK, there’s an increasing likelihood that the country will exit the EU. The date for a referendum is still set for 2017 so this isn’t pressing yet, however it’s a story that could develop in importance and impact on financial markets as the date approaches.

The odds offered by Ladbrokes were originally 6/4 but have been cut to 11/8. The odds for voting to remain is currently around 1/2. Upon closer inspection it appears that the headline hitting the main news wires and newspapers in the UK maybe somewhat misleading here.
This may just be a case of a bookmaker trying to drum up interest in their business. Ladbrokes head of political odds tried to stir the pot further by saying that the vote is almost to close to call “The polls and the odds suggest this could be a photo-finish”.

The change in odds is only slight as the last 5 prices have been: 11/8, 6/4, 13/8, 7/4 and 15/8. The impact on Sterling if a brexit were to happen is not certain, however many factors would suggest a weakening in the currency.

Additionally if the contest becomes close to call, similar to the Scottish independence referendum, then we’d expect to see some softness in the Pound as the uncertainty of a clear outcome may weigh on the currency.

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