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The following guest post is courtesy of Patrick Latchford, CEO of FCA regulated broker Blackwell Global.
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I was sure that the referendum would result in a small majority in favour of remain, that’s what the City expected, a confident expectation that GBPUSD would push on to the 1.50 level as a sign of that exuberance. Instead, Brexit won the day, and GBPUSD is trading at 1.2930, as I write, a reflection of the shock, the crisis in confidence that has purveyed the doubters of the City, not just in London, but in all the key global financial centres. But by any standards these doubters cannot have lived and worked in the City either at all, or for any great length of time.
The City is dead. Long live the City
The City has always been a ‘thriver’, as times change, it relishes uncertainty, turmoil, and dissention. Entrepreneurship, in this country, started here, just look at the revolution in markets, products, technology, and transparency that has occurred in the last 30 years. The City is a decision maker, the key to any business growth, and if it gets it wrong, a new decision is made, a new direction taken.
Down with the Usurpers
Can other European capitals usurp London? Can Paris, Frankfurt, or even Barcelona pick away and weaken The City? Well I’m relieved to hear that they are trying, in fact I am delighted. Let’s face it, The City loves a good fight, the best fitness regime available. It’s no co-incidence that the peak of physical fitness or business strength is characteristically called ‘fighting fit’, the point at which every muscle and sinew is strained in the pursuit of survival, then victory, then rule. In Paris and Frankfurt alone, their employment rules, so hopelessly in favour of the employee, are enough to put off most finance firms.
Let them eat cake
So, as I see the rate of forex account opening increasing, what happens next is that the doubters will wake up, probably ‘en masse’, and the markets will respond; At below 1.2900, GBPUSD has to be a buy, and at 0.8540, EURGBP must be a sell; markets always overreact and, as a hedge fund mate of mine said, on Friday, “we’re filling our boots at these levels”, so says someone with City pedigree.
As the gasps, cheers, murmurs, and hum dies down, after the fight, don’t be surprised to see daubed on the walls, “The City Rules OK !”, don’t doubt that the sign off is an exclamation not question mark.
Off with their heads
As an epilogue to my last note, I suggested Boris would be bundled down to the river post ‘remain’ and ‘disappear’, well he’s virtually disappeared whilst he’s nemesis , like in all good films, was the least likely person, his ‘Tessio’ to the Don, ‘lieutenant’ Gove. Well we know what happened to Tessio; its Gove’s turn to get in the boot of that car, no plea to ‘get me of the hook, for old times’ sake’, will avoid his political demise.
I can hardly wait for the “The Referendum, Part II”, just how much blood will be spilled in that, all we know is that it’s just a high level pitch at the moment, the writers are working on it, and they’re considering a number of alternative endings.