Brexit: 1/3 chance of new referendum/election in next 12 months - BBH

Richard Kelly, Head of Global Strategy at TD Securities, notes that taking into account all the events over the weekend, it suggest that the UK faces the prospects of about a one-third chance of a new referendum or new election over the next 12 months which would reverse the Brexit decision.

Key Quotes

· IG spread betting firm weekend market suggests a 2.8% fall in the FTSE 100 on the open tomorrow, about 1% lower than would be suggested to catch up with the S&P500 close.

· Over the weekend, the UK’s EU Commissioner has resigned, Tory and Labour leadership struggles have accelerated, Scottish leaders are moving ahead with plans for a new Scottish Referendum, LibDems have suggested they will run in new elections on preventing Brexit, and EU leaders have offered mixed messages on timing to trigger Article 50.

· The events over the weekend suggest to us about a one-third chance of a new referendum or new election over the next 12 months which reverses this decision, but we still see limited chance so far of a change in the next few months that could see markets start to reverse risk aversion. We run through modalities that may begin to be speculated to achieve this.