UK: Brexit – potential fallout

Our base case is that the UK will vote to remain in the EU. But the shift in the polls means we also need to consider the impact of an out vote on 23 June. These are the 12 risks you should weigh and be prepared to act on. GBP would initially fall 10% against the US dollar, then bounce, as a chunk of investors would think Brexit was a good thing. Then weakness would resume (probably 20% peak to trough) as it became clear it was not. A similar pattern might unfold for equities. A vote for Brexit would create enough turbulence to halt Fed hikes for the moment. Despite this, both sterling and the euro would weaken against the US dollar, but the yen could strengthen.

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