The worst is likely over

What a contradiction when I just advised for a good dose of correction! But it is not, as I'm not talking about the US market at all. It is another slow-motion water torture type of depressive movement that has being haunting the country for over 3 years. You may guess what I'm talking about. Yes, it is the UK Brexit!


Since the UK referendum decided to leave the EU (aka. Brexit) over 3 years ago, the country has entered a never-ending nightmare that has turned it upside down many times economically. Such a move without a historical precedent has largely shaken up the confidence of the business cycle. Nearly all the major multinational companies or institutions that have a headquarters in the UK have it moved out. Major investment decisions have been postponed, new hiring has been suspended.....Just name a few. No need to say this is a very serious disruption to the UK economy and business development. If you want to see how the world is looking at the country in terms of confidence, you simply just look at its currency. The UK British Pound has last 25% from the peak to trough in the past 3 years since Brexit started. No need to say, the investor's sentiment for the UK as a whole is deeply in the toilet and outright depression. But my source tells me we may have seen the bottom for the UK Brexit crisis regardless what will happens next. Here are a few pieces of evidence that suggests the economic situation is improving in the UK:

• the UK unemployment is at its lowest since the mid-1970s
• the growth in employees’ weekly pay has increased 4%… the fastest average wage growth since mid-2008.
• the housing prices across the UK appear to be rising.
• more encouraging, foreign firms have been quietly buying up British companies as the M&A activity is heating up without much notice. Per Bloomberg's  report, an increase to 475 acquisitions for a combined $232 billion has been made two years after the vote.

While the final Brexit deal with EU is still up in the air pending on the parliament vote to approve by the UK this weekend as well as the EU final approval, I think it doesn't matter too much now. We likely have seen the worst for the UK Brexit saga and the next major move is likely up. Well the sensitive UK currency (FXB) has already started to make the move to the upside. After making a double bottoms recently, it is screaming higher these days. Its long term weekly chart has shown a good bottoming trending for highs. Depending on the final Brexit deal vote, it may come back down a bit towards the support around 122/123 area but I think it will hold and trend higher again soon.

The UK has gone through a crisis in the past 3 years but finally I think it is seeing the light at the end of the tunnel. Betting for the UK is safer than most people would think.