Ahead of the opening bell to start the week this Monday, a report from the United Kingdom (U.K.) tells us that British Prime Minister Theresa May is making good on the Brexit vote — the U.K. will officially begin the decoupling process from the Eurozone on March 29, which is mid-next week. Although the British pound had never been turned in for the euro monetary unit, Britain itself had been an important cog in the wheel of the Eurozone’s economy.
Following the disastrous (to some) vote brought forth by then-Prime Minister David Cameron last year, British nationals opted to leave the European Union (EU). It was a development that stunned the global marketplace; it even caused the Federal Reserve to pass on raising interest rates last summer, when common wisdom was that a quarter-point hike was in the cards. And although it spoke loud and clear on behalf of a dissatisfied segment of the British populace, many thought it was just a matter of time before executors of the program would broker a deal and avoid decoupling after all.
Now, no more. Brexit is really happening, and starting next week. Theresa May rose to prominence and ultimately power in the U.K. largely due to her frank, public assessment of the Brexit vote, and is making good on her promises to move the measure forward. And though the markets had partly priced in this decoupling, the other shoe dropping is likely meaningful for another segment of the investor population.
To wit, market futures are down slightly in today’s pre-market. We don’t have earnings season or the anticipation of a new Fed rate hike or even big questions relating to how the Trump administration intends to govern — all these things are now part of the tapestry, for better or worse. And investors will act accordingly.