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Brexit and the British Stock Market

Uncertainty almost always results in the value of stocks going down which is almost certainly the reason that the value of UK companies has remained low in comparison to the rest of the world as we navigate the ever changing Brexit landscape.

There are almost certainly more sharp swings in the road ahead and we do expect the Sterling and UK stock markets to display further volatility, which of course makes them a riskier option.

However, if there is a successful Brexit deal, and this is still a possibility, smaller British company shares are set to make a comeback in light of this and a Covid-19 vaccination. The clients of large American investment banks are now being advised to buy into British stocks, fueling hopes that foriegn investment will give British markets a substantial boost.

A Brexit trade deal could result in a stronger currency, and the recovery of the pound will in turn have a positive impact on the value of smaller companies who are the most impacted by the fall in value of the pound.

As trade deals are extended further, there could be an opportunity to take advantage of the low cost of British stocks, but the time to act is now as once trade talks come to an end, this opportunity will be past us. With the cost of British stock at its lowest for 50 years, small British companies are poised to take advantage of the recovering economy, and the narrowing of discounts on smaller company investment trusts suggests an increase in enthusiasm for British stocks.

However, it would be advisable to display caution as this is still a volatile space, and any investor should be wary of buying and selling stock too frequently as this is more of a long term investment in order to see real gains. Investors should also ensure they have a good mix of investments in order to mitigate their exposure to risk with a diversified portfolio that can withstand the storm ahead.

Start with our guide on How to Start Investing if you’re unsure.

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