The Likelihood Of A Brexit Is Increasing

In a new report, Credit Suisse analyst Sonali Punhani discusses the latest poll numbers out of the U.K. regarding the possibility of a British exit (Brexit) from the Eurozone. According to Punhani, the momentum behind the Brexit movement has never been stronger.
 

On February 19, British Prime Minister Cameron agreed to a new set of terms regarding the U.K.’s relationship with the EU for the next seven years. Disapproval of the agreement sparked a new wave of Conservative calls for a Brexit and sent the British currency plummeting.
 

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Punhani notes that a recent study by the Cabinet Office found that it would likely take an independent U.K. a decade to re-negotiate all of the trade agreements is currently has in place via the EU. “A Brexit vote would negatively affect the lives of millions and a decade of uncertainty would hit ‘financial markets, investments and the value of the pound,’” Punhani said, referencing the Cabinet Office’s report.

The Brexit referendum is scheduled for June 23, and the most recent poll numbers show a virtual tie between those in favor of a Brexit and those opposed, each registering about 41 percent of the vote.

So far this year, the iShares Trust EWU is down 3.7 percent.

Disclosure: the author holds no position in the stocks mentioned.