FTSE Rallies: Prompted By Theresa May Brexit Comments

The FTSE 100 has become a binary option trader’s best friend as of late. Recently, not only have we seen a ton of movement in the index, we’ve seen highly predictable movement, giving way to countless profitable trades in the binary options space. Today was yet another incredibly strong day for the FTSE 100, leading to yet another record close. For the most part, the gains were caused by concerns following Theresa May’s comments about the Brexit. Below, we’ll talk about the comments, why they are leading to concerns, why these concerns are leading to gains for the FTSE 100, and what binary options traders should be watching ahead.

Prime Minister Theresa May Sparks New Brexit Concerns

As mentioned above, the movement that we saw in the FTSE 100 today was the result of comments made with regard to the Brexit by UK Prime Minister Theresa May. In her comments Theresa May made it clear that her goal was not to hold onto “bits of EU membership”. She explained…

“Often people talk in terms that we’re leaving the EU but we’re going to keep bits of membership of the EU… We’re leaving, we’re coming out, we’re not going to be a member of the EU any longer.”

These comments make a Hard Brexit a more likely scenario than it was in the past. This became a key concern, leading to declines in the GBP. After all, if the UK isn’t willing to hold onto anything from the EU, they are no longer going to benefit from the EU, and that can be economically devastating from a trade perspective.

How This Is A Benefit To The FTSE 100

In most cases, when economic conditions are called into question, the indices associated with the economies have a rough day. However, that’s not the case with regard to the FTSE 100 today. In fact, while the economy in the UK is being called into question, it’s flagship index closed the day on a record high. So, why is this happening? The answer is simple…

At the end of the day, the FTSE 100 is a commodity heavy index. As a result, the index sees a big benefit from declining economic conditions. At least, on a short term level. When economic conditions in the UK decline, the GBP falls. However, most commodities aren’t dealt in GBP, they are dealt in USD. So, because the GBP is declining, the values of commodities are climbing in the UK. As a result, the FTSE 100 is climbing too.

What To Watch Ahead

Moving forward, the keyword is Brexit. It seems as though the closer and closer we get to the end of March when the UK will invoke article 50, the more hard lined approaches we’re starting to see. Theresa May made it clear that the UK has no intentions of holding onto any bits and pieces of the EU membership. That’s a big statement that immediately shuts down just about everything the EU would be looking for in negotiations. In return, we can expect for the already hard lined approaches of Merkel, Hollande, and other EU members are taking to become even more economically combative.

At the end of the day, things aren’t looking good for a simple agreed Brexit. Nonetheless, as more opinions continue to make their way to the lime light, we’re likely to see more, highly predictable movements out of the FTSE 100 ahead. So, pay attention to comments out of Theresa May as well as European leaders with regard to the Brexit for an idea of where the FTSE 100 is headed next.