Brexit

This day last year the citizens of Britain took a vote for independence from the European Union. The shocking outcome and consensus was clear that the people want their power back. Frustrated with the lack of ability to make changes in a timely fashion due to the extensive chain of command that comes with being in a "grouped" economy. Leaving prosperous nations liable for the faults of lagging nations in the bloc. Many of those faults due to failed central bank leadership. Main examples being Greece, Spain and Italy. Once it becomes clear to the market that a country is unable to keep up with its obligations or debt, it becomes a target for speculators and bond holders looking to protect their exposure to default via the Credit default swap. CDS ensure the buyer will be paid full premium for the security if the seller defaults on the debt. The Spanish 10 yr note is a popular barometer of risk in European debt markets. Today the Spanish 10 yr yields just over 2%. In 2012 the yield on Spanish 10 yr bond was over 6%. Another gage of debt and unsustainably low interest rates is gold(xau) Rocketing over $1500 an ounce after 9/11. The U.K. Has a unique safety mechanism that keeps it s currency the most valuable in the world. Silver certificates back British government debt similar to the way gold was used to back US debt. Despite Britain's proven track record for weathering the storm, the GBP dropped from$1.50 to $1.32 almost instantly. Today the GBPUSD trades at 1.27 and is facing more pressure than ever to test levels below$1.20 if the uncertainty continues. PM Teresa May was unable to secure a convincing amount of votes for the Conservative party. Raising doubt that the transition will be a smooth process. Lately, London has been focusing on new trade deals with China. Hoping to expand trade with worlds 2nd largest economy. As of now it seems that the cloud of uncertainty will be around for some time. With no clarity in leadership or trade policy investors will continue to reduce exposure to U.K.